Santos completes ConocoPhillips N. Australia acquisition

Santos Ltd. completed the acquisition of northern Australia and East Timor assets in the Timor Sea from ConocoPhillips for a reduced price and an increased contingency payment (OGJ Online, Oct. 14, 2019). 

Due to market volatility and the deferral of the Barossa FID, the companies agreed to decrease the sale price to $1.265 billion from the initial $1.39 billion and increase the contingent payment on the Barossa gas-LNG project final investment decision to $200 million from the previous $75 million, Santos said.

At completion, the net settlement was $655 million, lower than the previously forecast $800 million. The amount is before sell-downs on interests owned by Santos in the acquired assets.

Santos gains operatorship and control of long-life gas resources along with strategic LNG infrastructure. The company’s interest in Bayu-Undan field and the Darwin LNG plant increases to 68.4%, while its interest in the Barossa project to backfill Darwin LNG increases to 62.5%.

The purchase was fully funded from available cash plus $750 million of new 2-year acquisition debt.

The company previously agreed to sell a 25% interest in Darwin LNG and Bayu-Undan to SK E&S of South Korea for $390 million and has signed a letter of Intent to sell a 12.5% interest in Barossa to JERA. These sales are subject to third-party consents, regulatory approvals, and the FID at Barossa.

Talks continue with other parties for the sale of further equity in the Barossa project to bring the Santos interest down to 40%.