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- Santos (STO) receives an offer from Kumul Petroleum to acquire a five per cent stake in the PNG LNG asset for US$1.4 billion (A$2.16 billion)
- Kumul paid US$55 million to the company which will be held as a deposit if Santos accepts the offer
- The offer will remain open until December 31 and, until then, Santos will only deal with Kumul regarding the sale of equity, which includes a heads of agreement negotiation
- If successful, the transaction will increase the equity interest of the PNG government to around 22 per cent and Santos will hold a 37.5 per cent interest in PNG LNG
- Shares in Santos are up 0.94 per cent, trading at $6.95 at 2:04 pm AEST
Santos (STO) has received an offer from Kumul Petroleum to acquire five per cent of its PNG LNG asset for US$1.4 billion (A$2.16 billion).
The asset value includes a proportionate share of project finance debt of approximately US$0.3 billion.
Kumul is Papua New Guinea’s (PNG) national oil and gas company, and an existing partner in the PNG LNG project.
To secure the binding offer, Kumul paid US$55 million to Santos which will be held in escrow to be released as a deposit for a partial payment of the offer price, if Santos accepts.
The offer is final and conditional upon Kumul obtaining waivers of certain pre-emptive rights by each other project participant to allow the transaction to proceed.
Further, the offer will remain open for acceptance until December 31 and between now and then, Santos will deal exclusively with Kumul regarding the sale of equity in PNG LNG.
If successful, the transaction will increase the equity interest of the PNG government to around 22 per cent, supporting its objectives for the people of PNG to have a greater equity interest in the development of their natural resources.
Santos Managing Director and CEO Kevin Gallagher said the potential sale of a five per cent interest represented an opportunity to build strategic alignment for the future development of PNG’s natural gas resources.
“Following the transaction, Santos would maintain a 37.5 per cent interest in this world-class project.”
The parties will negotiate a heads of agreement to further collaborate on the development of Kumul’s regional capacity and capability, including carbon emission reduction opportunities to achieve net-zero operations.
Shares in Santos were up 0.94 per cent, trading at $6.95 at 2:04 pm AEST.
