2010-07-28-2010-07-28

To sell 7.6% interest held in Lukoil, representing 40% of 163.3 million shares currently owned by ConocoPhillips.

Houston-based supermajor ConocoPhillips (NYSE: COP) reports that it has reached an agreement with Russian oil giant Lukoil to sell approximately 64.6 million Russian registered shares to Lukoil for $3.44 billion.

The shares represent a 7.6% interest held in Lukoil, or 40% of 163.3 million shares currently owned by ConocoPhillips. The remaining 60% owned by ConocoPhillips are depositary receipts and are expected to be sold in open market transactions or to Lukoil by the end of 2011, the company said in its second-quarter earnings report.

ConocoPhillips president and chief executive Jim Mulva says, "Over the past five years, ConocoPhillips and Lukoil have worked closely together to develop opportunities in and out of Russia. Our experience with Lukoil and the Russian authorities has been positive, and we look forward to a productive relationship in the future. However, given the expected business environment and our stated strategy to enhance returns and increase distributions, we have made the decision to sell our entire stake in Lukoil. We expect to accomplish this by the end of 2011, with the proceeds used primarily to repurchase ConocoPhillips shares."

This deal is expected to close in the third quarter of 2010.