The Santos Ltd (ASX: STO) share price will be one to watch on Friday after an after-hours announcement today.
What did Santos announce?
This afternoon the energy producer announced that it has agreed to sell a 25% interest in Darwin LNG and BayuUndan to SK E&S for US$390 million. The agreement will be backdated to October 1 2019, with customary adjustments on completion.
According to the release, the sale is conditional on Santos completing the acquisition of ConocoPhillips’ northern Australia and Timor-Leste portfolio which was announced in October last year.
In addition to this, it remains conditional on third-party consents, regulatory approvals, and a final investment decision on Barossa.
In respect to the latter, SK E&S already has a 37.5% interest in the Barossa project to backfill Darwin LNG. Santos believes this sale advances partner alignment for the development of Barossa, which remains a key priority for both companies.
Santos Managing Director and Chief Executive Officer, Kevin Gallagher, said was pleased with the agreement and notes that it is another significant step towards bringing Barossa gas into production through the Darwin LNG facilities.
He said: “We are delighted to have agreed terms with SK E&S to acquire interests in Darwin LNG and Bayu-Undan and look forward to continuing and building on the long-term relationship between our two companies.”
“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. 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.
Mr Gallagher also provided an update on the Barossa joint venture.
He advised: “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.”
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.