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Quotes by TradingView

Santos sells interest in Darwin LNG and Bayu-Undan

13 Mar, 2020
310
Darwin LNG
Image courtesy of ConocoPhillips Australia.

Santos has agreed to sell a 25 per cent interest in Darwin LNG and Bayu-Undan to SK E&S for US$390 million with effect from 1 October 2019 with customary adjustments on completion. Santos also receives the benefit of approximately US$120 million of cash flow relating to the interests from 1 January 2019 to 1 October 2019.

SK E&S already has a 37.5 per cent interest in the Barossa project to backfill Darwin LNG. Santos’ sale of interests advances the development of Barossa, which remains a key priority for both companies.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said the agreement with SK E&S is another significant step towards bringing Barossa gas into production through the Darwin LNG facilities.

“Santos continues to build alignment between the Darwin LNG and Barossa joint ventures through discussions with Darwin LNG participants and others to acquire equity in Barossa. We are in advanced discussions to sell-down equity in Barossa to a target ownership of around 40 per cent to achieve increased partner alignment.”

“Santos expects to take a final investment decision for the development of Barossa following completion of the ConocoPhillips acquisition and once all necessary technical, engineering and commercial contracts are in place, including the processing agreement with Darwin LNG, to allow the project to proceed subject to market conditions,” Mr Gallagher said.

As announced on 14 October 2019, Santos’ net funding requirement for the ConocoPhillips acquisition is expected to be approximately US$775-825 million, net of the proceeds realised from the sell-down to SK E&S and post the benefit of cash flows generated from the acquired business from the ConocoPhillips acquisition effective date of 1 January 2019 to completion with customary adjustments.

Santos’ pro-forma gearing on completion of both the ConocoPhillips acquisition and SK E&S sell-down is expected to be approximately 33.5 per cent before any cash generated from the sell-down of equity in Barossa.

The sale is conditional on completion by Santos of the acquisition of ConocoPhillips’ northern Australia and Timor-Leste portfolio, third-party consents, regulatory approvals and a final investment decision on Barossa.

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