By Mikaila Adams
Oil & Gas Financial Journal

Following a strategy enacted by other oil and gas companies before it, Houston-based oil and gas supermajor ConocoPhillips (NYSE:COP) is planning a spin-off into two, stand-alone public companies.

Marathon Oil Corp.  (NYSE: MRO) completed its spin-off of Marathon Petroleum Corp. (NYSE: MPC), making Marathon Oil an independent upstream company earlier this month.

According to ConocoPhillips, separating the company’s Refining & Marketing business from the Exploration & Production business via a tax-free spin-off is meant focus on value creation for its shareholders.

Investing in spin-off companies can be both risky and profitable, but in a note today, energy attorney Aaron Ball said this particular spin-off “should look strong from a financial perspective.” 

“ConocoPhillips was a top performer among integrated oil companies during 2010. Leading analysts project that the company will earn $7.75 per share and dividends will rise by 10% annually in 2011 - 2012,” Ball continued. Recent statistics from sister publication Oil & Gas Journal put the company at No. 3 in net income and stockholders' equity at the end of the fourth quarter 2010.

“Consistent with our strategy to create industry-leading shareholder value, we have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies," said ConocoPhillips chairman and CEO Jim Mulva in a prepared statement. “Both companies will continue to benefit from the size and scale of their significant high-quality asset bases and free cash flow generation, allowing them to invest and create shareholder value in a changing environment."

Mulva, an executive at the company since 1990, plans to retire when the spin-off is complete. ConocoPhillips expects the transaction to close in the first half of 2012.