NEW YORK — Oil giant ConocoPhillips said Thursday it will split into two companies: one that produces oil and another that refines it into gasoline and other fuels.
The decision was cheered by Wall Street analysts and investors, who see advantages to running smaller, more focused operations. Shares gained $1.53, about 2.1 percent, to $75.93 in afternoon trading.
“This is so positive for them,” said Oppenheimer & Co. analyst Fadel Gheit of the Conoco split. “Everyone should stick to one business.”
The move continues an about-face for a company that spent billions of dollars over the past several years growing into America’s third-largest oil company. After snapping up Burlington Resources for $35 billion and making multibillion-dollar investments in Russia’s Lukoil and the Rockies Express gas pipeline, Conoco was deep in debt. The company has been trying to shed assets since last year.
ConocoPhillips also said chief executive Jim Mulva will retire when the spinoff is completed.
Conoco has talked about scaling back its refining business, but it had previously balked at a spinoff. Gheit said company officials likely changed their minds after seeing how successful Marathon Oil was at spinning off its refining operations.
Conoco’s refineries produced 2.3 million barrels per day of gasoline, diesel and other petroleum products in the first quarter, eclipsing other independent players such as Valero Energy Corp. Valero is still bigger in terms of worldwide refining capacity, however.
The refining business is notoriously volatile. It makes money when the prices of such products as gasoline, diesel and jet fuel outpace oil and manufacturing costs. The key is to refine crude as cheaply as possible and sell petroleum products in markets where they’ll generate the biggest revenue.
