Santos and ConocoPhillips adjust deal

28th May 2020 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH ( – Oil and gas major Santos has reworked its agreement with New York-listed ConocoPhillips over that company’s northern Australian business, which includes its share in the Darwin liquefied natural gas (LNG) project, and the Bayu-Undan, Barossa and Poseidon assets.

The total consideration for the sale remains unchanged at $1.39-billion, however, the consideration now consists of $1.265-billion in cash and a contingent payment of $200-million instead of $75-million, subject to a final investment decision in the Barossa project.

Santos on Thursday told shareholders that the agreement had been reworked based on the recent market volatility and the deferral of a final investment decision on the Barossa project.

Santos MD and CEO Kevin Gallagher said he was pleased to complete the acquisition, which is fully aligned with Santos’ strategy to build on existing infrastructure positions around the company’s core assets.

“As a foundation partner in Bauy-Undan and Darwin LNG, and an existing partner in Barossa, we know these assets well.”

The purchase price at completion was fully funded from available cash and with $750-million of new acquisition debt.

Santos previously announced an agreement to divest of a 25% interest in the Darwin LNG and Bayu-Undan projects to SK E&S for $390-million, and has inked a letter of intent to sell a 12.5% interest in Barrossa to JERA. Following the completion of these transactions, the company will hold a 43.3% interest in Darwin LNG and a 50% stake in Barossa.

However, Gallagher said that the company was continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with the targeted ownership level of around 40%, to achieve increased partner alignment and prudent future allocation of growth capital.

“We are also in discussions with buyers of Barossa LNG volumes,” Gallagher said.

ConocoPhillips executive VP and COO Matt Fox said on Thursday that Santos had a strong presence in Australia in the oil and gas industry, and that the sale of the northern Australian assets would help to continue the development of oil and gas resources in the country.

“ConocoPhillips has more than two decades of local operations success in Australia and we look forward to continuing our presence in the nation with our Australia Pacific LNG project and exploration activities,” he added.

Production associated with the assets being sold was approximately 50 000 bbl/d of oil equivalent for the first half of 2019 and proved reserves were approximately 39-million barrels of oil equivalent at year-end 2018.