PERTH (miningweekly.com) – The Australian Competition and Consumer Commission (ACCC) on Friday reported that it will not oppose ASX-listed Santos’ proposed acquisition of Quadrant Energy.
Santos in August launched a $2.15-billion bid for Western Australia-focused Quadrant Energy, which holds natural gas and oil production, as well as near- and medium-term development, appraisal and exploration assets across more than 52 000 km2 of acreage, predominantly in the Carnarvon basin.
Under the terms of the agreement, Santos will acquire 100% of Quadrant for an upfront payment of $2.15-billion in cash, and contingent payments linked to the 2C oil/liquids resource certification for the Dorado project, of more than 100-million barrels of oil equivalent and a future final investment decision, as well as royalty over any future Bedout basin project revenue, excluding production from Dorado.
The ACCC found that it was unlikely that the proposed acquisition would result in a substantial lessening of competition in the supply of gas to domestic customers in Western Australia.
“The ACCC considers that a combined Santos/Quadrant will continue to face strong competition from a range of suppliers, including large liquefied natural gas producers such as Chevron and Woodside,” ACCC chairperson Rod Sims said.
“Most market participants believe the Western Australian domestic gas market is currently over supplied. While the demand-supply balance could tighten in future, the ACCC considers that the proposed acquisition will not have a significant impact on future gas prices.”
Santos MD and CEO Kevin Gallagher has welcomed the announcement, saying that the Quadrant acquisition would deliver increased ownership and operatorship of a high quality portfolio of low cost, long life conventional Western Australian natural gas assets, which are well known to Santos.
“It is materially value accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier.
“We already have very significant growth projects across our five core assets, and Quadrant’s recent oil discovery at Dorado is another exciting opportunity for us.”
With the ACCC approval now obtained, the completion of the transaction is expected within weeks.