By Houston Business Journal

ConocoPhillips on Wednesday said it is moving forward with its plan to unload its entire stake in Russian oil company OAO Lukoil, selling an initial 7.6 percent stake to Lukoil for $3.4 billion.

The Houston oil giant announced in March that it would cut its stake in Lukoil as part of a plan to sell $10 billion in assets by 2011. ConocoPhillips began purchasing shares of Lukoil in 1998.

The deal has Lukoil buying about 64.6 million Russian registered shares from ConocoPhillips. The shares represent 40 percent of the 163.3 million shares owned by ConocoPhillips.

The companies expect to close on the deal in the third quarter.

The remaining 60 percent stake is in the form of depositary receipts that ConocoPhillips plans to sell to Lukoil or on the open market by the end of 2011.

ConocoPhillips plans to use proceeds from the sale to buy back company shares, according to Jim Mulva, ConocoPhillipsâ¿¿ president and chief executive officer.

Also on Wednesday, the company reported the nearly doubling of its second-quarter earnings.

ConocoPhillips posted net earnings of $4.2 billion, or $2.77 per share, on revenue of $45.7 billion, for the quarter ended June 30, 2010. That compared with $859 million, or 57 cents per share, on revenue of $35.5 billion, for the same period in 2009.

The company said its earnings were not affected by the current U.S. offshore drilling moratorium, as less than one percent of the companyâ¿¿s oil and natural gas production comes from the impacted areas.

Also in July, ConocoPhillips (NYSE: COP) sold its Flying J stake for $626 million to Pilot Travel Centers LLC.

Copyright 2010 American City Business Journals
Copyright 2010