PERTH (miningweekly.com) – Takeover target Oil Search has secured a $565-million non-amortising revolving credit facility with an expiry date of December 2026, from a banking group comprising banks from Papua New Guinea (PNG), Australia, Asia and the US.
The new corporate facility replaces the previous $600-million non-amortising revolving credit facility, that was due to expire in June 2022.
“We are pleased to see support from both existing and new relationship banks, which signals their recognition that PNG continues to be an attractive country to invest in,” said Oil Search VP for treasury Chelsea McGregor.
“The new facility extends the group’s weighted average debt maturity profile, maintains liquidity above $1-billion and is a key component of Oil Search’s capital management strategy for the next five years.”
Oil Search is in the midst of a takeover from fellow-listed major Santos, which will create a A$21-billion oil and gas giant.
Under the merger agreement, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held via a scheme of arrangement, and Oil Search shareholders will own approximately 38.5% of the merged group and Santos shareholders will own approximately 61.5%.
The combined company would have a 2021 production of around 116-million barrels of oil equivalent, Santos MD and CEO Kevin Gallagher said this week.
“Size, scale and strong free cash flow generation would position us for success in the new era of decarbonised fuels and energy. Critically, this will provide the platform for us to self-fund growth and deliver strong shareholder returns, well into the next decade.
“In other words, the size and scale that comes from this merger and the cash generative nature of our base business is what will help us fund the transition to net-zero emissions,” Gallager said at an event in Perth.
Santos is targeting net zero emissions by 2040.