ConocoPhillips (NYSE:COP) announced it will be splitting itself into two publicly traded companies, which will result in the creation of the worlds largest independent refiner, according to Oppenheimer & Co. analyst Fadel Gheit.
At the end of the transaction, Conoco CEO and Chairman Jim Mulva reportedly will retire.
Mulva said in a statement, "We have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies."
The company will spin off its refining and marketing segment in a tax-free deal while Conoco remains an exploration and production business.
Production at Conoco refineries for the first three months of 2011 was 2.3 million barrels a day.
Expectations are the refining business will attract a new class of investor which don't mind the volatility connected with the refining segment.
The refining industry is more susceptible to margin pressures when the price of oil goes up, as it finds it more difficult to pass higher costs to customers.
Conoco had resisted spinning off their refining business, but some analysts believe seeing the share price of Marathon (NYSE:MRO) soaring after they spun off their refining business probably was the catalyst pushing them to make the decision.
The spin off is expected to be completed during the first half of 2012.
CEO Jim Mulva will reportedly retire once the transaction is completed.
Shares of Conoco jumped on the news, trading at $78.56, gaining $4.16, or 5.59 percent, as of 10:12 AM EDT.
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