The acquisition will be funded by cash and new debt facilities. As of 30 June 2018, Santos had $.15bn cash on hand.
The agreement also includes any contingent payments linked to Dorado oil/liquids 2C’s resource certification of more than 100 million barrels of oil (mmbbls), as well as a future final investment decision (FID) certification payment and royalties over any future revenue from Bedout Basin project.
Santos managing director and CEO Kevin Gallagher said Santos: “This acquisition delivers increased ownership and operatorship of a high-quality portfolio of low-cost, long-life conventional Western Australian natural gas assets, which are well known to Santos, and importantly significantly strengthens Santos’ offshore operating capability.
“It is a materially valued accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier.
“The transaction lowers our proforma 2018 forecast free cash flow breakeven oil price by a further $4 per barrel of oil (bbl) and Quadrant’s stable cash flows provide increased certainty during the upcoming period of major growth project delivery.”
Quadrant Energy has natural gas and oil production, near and medium-term development, appraisal and exploration assets spread across 52,000km2, mainly situated in the Carnarvon Basin offshore Western Australia.
Given that Quadrant’s conventional natural gas assets have a significant overlap with Santos, the deal is expected to help in achieving synergies between $30m and $50m annually.