Santos Gets $1.1 Billion Offer for Australian Gas Fields

  • Quadrant Energy makes binding bid for Western Australia assets
  • Santos also in talks with Marubeni on sale of PNG LNG stake

Santos Ltd., which last week rejected a $5.2 billion takeover offer, has received a binding bid from Quadrant Energy Pty for Australian oil and gas fields the companies jointly own, people with knowledge of the matter said.

Santos is considering the offer of about A$1.5 billion ($1.1 billion) for its stakes in the fields in Western Australia state as part of a broader review of its assets, according to the people. Japanese trading house Marubeni Corp. is separately in talks to buy 3.6 percent of Exxon Mobil Corp.’s Papua New Guinea liquefied natural gas plant from Santos for more than A$1 billion, the people said, asking not to be identified as the details are private.

The Australian energy producer is speaking to a number of parties about different sets of assets, according to the people. Santos hasn’t made a final decision on which parts of its portfolio to sell or whether it needs to raise equity in addition to the divestments, the people said. 

Santos said in August it’s considering strategic options and that Chief Executive Officer David Knox will step down as the rout in commodity prices triggered concerns that the company has too much debt. The company last week rejected a A$6.88-per-share takeover offer from Scepter Partners, an investment firm backed by Asian and Middle Eastern royalty, saying it was too low and “opportunistic.”

Santos shares fell 1.3 percent to close at A$6.34 in Sydney, taking this year’s decline to 23 percent and valuing the company at A$6.6 billion.

Macquarie Deal

The Australian Financial Review reported earlier that Marubeni had expressed interest in part of Santos’s stake in the Papua New Guinea project and could reach a deal as soon as this week, without saying where it got the information. A spokesman for Quadrant said the company is “regularly approached” about its interest in various projects and declined to comment further. A representative for Marubeni said the company can’t comment at this time.

“The strategic review is ongoing, and will continue to consider all proposals which deliver appropriate value and certainty for shareholders,” Rob Malinauskas, a spokesman for Santos, said by e-mail.

Santos’s Western Australian assets, located in the Carnarvon Basin, accounted for 24 percent of its production last year, according to the company’s website. It owns 45 percent of the Reindeer, John Brookes and Spar gas fields there, while Quadrant owns the rest and is the operator. Santos also owns 37.5 percent of the Fletcher Finucane oil field in the region and is the operator.

Perth-based Quadrant Energy was formed after a group led by Macquarie Group Ltd. and Brookfield Asset Management Inc. agreed in April to buy Apache Corp.’s Australian assets for $2.1 billion. Macquarie has since sold part of its holding to other investors including Wesfarmers Ltd. and Western Australia businesswoman Angela Bennett’s family investment firm.

Santos owns 13.5 percent of the $19 billion PNG LNG plant, while Exxon Mobil holds 33.2 percent and Oil Search Ltd. 29 percent. 

Separately, both Santos and Quadrant are seeking buyers for the Stag oil field off the Western Australian coast, people familiar with the matter said in September. Santos owns 66.7 percent of the field, while Quadrant owns the rest and is the operator.

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