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Economy Briefs

- - Thursday, August 18, 2011

NEW YORK

Report: Exxon fights U.S. over major oil discovery

NEW YORK | Exxon Mobil Corp. and the federal government are fighting over one of the largest oil discoveries in the Gulf of Mexico that could yield billions of dollars of crude in coming years, according to a report in the Wall Street Journal.

The Julia oil field, about 250 miles southwest of New Orleans, may hold billions of barrels of oil and gas equivalent. Exxon, which announced the discovery in 2008, wants to tap that field. But the Interior Department says Exxon's leases have expired and the company hasn't met requirements for an extension.

Exxon and part owner Statoil have filed separate lawsuits in a Louisiana federal court to preserve the leases.

Exxon spokesman Patrick McGinn told the Journal that the government traditionally grants extensions as a matter of course. "You state your case and you got it." The government's refusal "was unexpected."

Tens of billions of dollars are at stake. The oil could revert back to the federal government if Exxon and Statoil don't win in court. And if the Interior Department takes back those leases, it would delay the development of those fields and the tax royalties that come with them.

At current prices, potential royalties paid to the government over the lifetime of a one-billion-barrel field would be about $10.95 billion, the Journal said.

CALIFORNIA

Reports: Hewlett-Packard to spin off PC business

SAN FRANCISCO | Hewlett-Packard plans to spin off its personal computer division into a separate business, according to news reports.

The decision, according to unnamed sources cited in reports by the Wall Street Journal and Bloomberg, would isolate a division that is HP's biggest generator of revenue but is its least profitable.

It marks a reversal from HP's previous stance, in March, when the company called reports that it might sell its PC business "irresponsible reporting".

The PC industry is under pressure from hot-selling smartphones and tablet computers, which have contributed to already weak consumer demand for PCs in the U.S. and Europe. HP may announce the move as early as Thursday afternoon, when it reports quarterly financial results.

An HP spokesman did not return a call from the Associated Press.

ILLINOIS

Caterpillar says sales growth continued in July

PEORIA | Caterpillar says global sales of its heavy equipment grew 35 percent in July even though last year's numbers were strong.

The world's largest maker of mining and construction equipment provided an update on sales Thursday in documents filed with the Securities and Exchange Commission. In the same period last year, Caterpillar reported a 32 percent increase in sales.

Jefferies & Co. analyst Stephen Volkmann said in a research note the new figures suggest Caterpillar's profits will be stronger than expected.

Caterpillar said the strongest regions for equipment sales in July were Latin America and Europe, Africa and the Middle East. Those regions reported sales increases of more than 50 percent.

Caterpillar's sales figures are considered an indicator of the health of the economy, so they are watched closely.

CALIFORNIA

Kerkorian sells 20M shares of MGM Resorts

LOS ANGELES | Billionaire investor Kirk Kerkorian is selling 20 million shares of MGM Resorts International for about $214.9 million, cutting his stake in the casino operator to 22.8 percent.

MGM Resorts said in a regulatory filing Thursday that Mr. Kerkorian's Tracinda Corp. investment firm sold about 15 percent of its shares in the company for about $10.74 each on Wednesday.

The transaction is expected to be completed Aug. 23.

Mr. Kerkorian was the company's majority owner as recently as 2009 and remains its largest shareholder with 111.2 million shares. Tracinda said it continues to believe MGM Resorts is a good investment.

MGM Resorts shares fell $1.40, or 12.1 percent, to $10.14 in afternoon trading as the overall market fell.

The company owns casinos in Las Vegas, Macau, China, and around the world.