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- Oil and gas giant Santos (STO) has completed the US$1.265 billion acquisition of ConocoPhillips’ northern Australian and Timor-Leste assets
- Due to the recent uncertainty surrounding market conditions, the price has decreased from the original US$1.39 billion to this new price
- This acquisition gives Santos control and operator-ship of a high-quality portfolio of low-cost, long-life natural gas assets and strategic LNG infrastructure
- It also provides a significant boost to Santos’ 2020 production and cash flows
- Santos is down a slight 2.31 per cent and shares are currently trading for $5.49 each
Oil and gas giant Santos (STO) has completed the US$1.265 billion acquisition of ConocoPhillips’ northern Australian and Timor-Leste assets.
Due to the recent uncertainty surrounding market conditions, the price has decreased from the original US$1.39 billion to this new price.
However, the contingent payment has increased from US$75 million to US$200 million, subject to final investment decision (FID) on the Barossa Project.
This acquisition gives Santos control and operator-ship of a high-quality portfolio of low-cost, long-life natural gas assets and strategic liquefied natural gas (LNG) infrastructure.
It also provides a significant boost to Santos’ 2020 production and cash flows.
Santos now has a 68.4 per cent interest in the Bayu-Undan and Darwin LNG, and a 62.5 per cent interest in Barossa.
Darwin LNG began in 2013 and was the first LNG project in the Northern Territory and only the second in Australia.
Gas is sent in a 502 kilometre pipeline from the Bayu-Undan field in Timor-Leste to Darwin LNG and then shipped overseas.
“As a founder partner in Bayu-Undan and Darwin LNG, and an existing partner in Barossa, we know these assets well,” CEO and Managing Director Kevin Gallagher commented.
“We are delighted to assume operator-ship and continue to progress the Barossa project so that final investment decision can be made when market conditions permit,” he said.
“We welcome the ConocoPhillips’ Australia-West employees to Santos and look forward to getting on with the process of integrating our two businesses to create one high performing team,” he added.
This purchase was fully-funded from available cash and US$750 million of two-year acquisition debt.
This reduced price has been beneficial for Santos, with net debt estimated at $3.75 billion.
Santos has also previously announced the completion of selling a 25 per cent interest in Darwin LNG and Bayu-Undan to SK E&S for US$390 million and the signing of a letter of intent to sell a 12.5 per cent interest in Barossa to JERA.
Santos is down a slight 2.85 per cent and shares are trading for $5.46 each at 3:59 pm AEST.
