Santos acquires ConocoPhillips’ northern Australian business for A$1.9bn

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Australia’s oil and gas giant Santos announced that it has completed the acquisition of ConocoPhillips’ northern Australia and Timor-Leste assets for ‘a reduced purchase price’ of US$1.265 billion (A$1.910 billion ) plus an increased contingent payment of US$200 million (A$302 million).

Subject to a final investment decision on the Barossa project, offshore Northern Australia, the acquisition increases Santos’ interest in Bayu-Undan and Darwin LNG to 68.4% at completion, providing a significant boost to the company’s 2020 production and cash flows.

Santos’ interest in the Barossa project to backfill Darwin LNG also increases to 62.5%.

Santos Managing Director and CEO Kevin Gallagher said the acquisition which was ‘fully-aligned’ with Santos’ strategy to build on existing infrastructure positions around its core assets.

“As a foundation partner in Bayu-Undan and Darwin LNG, and an existing partner in Barossa, we know these assets well, Mr Gallagher said.

“We are delighted to assume operatorship and continue to progress the Barossa project so that a final investment decision can be made when market conditions permit.”

“We welcome the ConocoPhillips’ Australia-West employees to Santos and look forward to getting on with the process of integrating our two businesses to create one high performing team,” Mr Gallagher said.

Santos has previously announced an agreement to sell a 25% interest in Darwin LNG and Bayu-Undan to SK E&S for US$390 million (A$589 million) and the signing of a letter of intent to sell a 12.5% interest in Barossa to JERA.

“Santos continues to build alignment between the Darwin LNG and Barossa joint ventures. Following completion of the previously announced sell-downs to SK E&S and JERA, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa,” Mr Gallagher said.

“We are continuing to advance discussions with other parties for the sale of further equity in the Barossa project in line with our previously stated target ownership level of around 40% to achieve increased partner alignment and prudent future allocation of growth capital. We are also in discussions with buyers for Barossa LNG volumes.”

The sale of interests in Bayu-Undan and Darwin LNG to SK E&S, and in Barossa to JERA, are subject to third-party consents, regulatory approvals and an FID decision on Barossa.

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