Conoco, Amerada and Marathon Return to Libya

ConocoPhillips(COP Quote - Cramer on COP - Stock Picks), Marathon Oil(MRO Quote - Cramer on MRO - Stock Picks) and Amerada Hess(AHC Quote - Cramer on AHC - Stock Picks) said they will resume oil production in Libya after a 19-year absence under a previously suspended joint venture.

The companies will pay a total of $1.3 billion to the Libya National Oil Corp. for a 25-year extension of the so-called Oasis venture, which was suspended in 1986 by order of President Reagan. The participants will also pay $530 million to Libya National to cover amortized investments.

Under the agreement, ConocoPhillips and Marathon each will hold a 16.33% interest, Amerada Hess will hold an 8.16% interest, and Libya National will have the remaining 59.16%.

The fields in question currently produce about 350,000 barrels of oil per day on 13 million acres located in the Sirte Basin. There are "sizable undeveloped oil and gas resources," the companies said.

ConocoPhillips expects to add about 45,000 net barrels of oil per day to its production, while Marathon expects to add more than 160 million barrels of oil equivalent to its proved reserves and about 40,000 to 45,000 net barrels per day of production during 2006. Amerada Hess will add more than 85 million barrels of oil equivalent to reserves and about 20,000 to 25,000 net barrels per day of production.