Santos has agreed to sell 25% stakes in the Darwin LNG project and the Bayu-Undan gas field to SK E&S for $390 million. The transaction is effective from October 1, 2019. Santos noted that it would receive around $120 million worth of cash flow relating to the interests from January 1 to October 1, 2019.
The sale is contingent on Santos completing its acquisition of ConocoPhillips’ assets in Timor-Leste and Northern Australia, which was announced on October 14, 2019. It is also contingent on third-party and regulatory approvals, as well as a final investment decision on the Barossa project.
SK E&S already owns a 37.5% stake in Barossa. Santos said that project was a key priority for both companies and that the transfer of Darwin LNG and Bayu-Undan assets advances Barossa’s development.
“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,” Santos’ managing director and CEO, Kevin Gallagher, said. “We are in advanced discussions to sell-down equity in Barossa to a target ownership of around 40% to achieve increased partner alignment,” he added.
“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,” Gallagher said.
Santos’ net funding requirement for the ConocoPhillips acquisition is expected to be roughly $775-825 million, net of the proceeds realized from the SK E&S transaction and including the benefit of cash flows generated from the acquired business.
