Oil and gas exploration company ConocoPhillips has signed an agreement to sell the subsidiaries that hold its Australia-West assets and operations to Santos in a deal valued at $1.39bn.
The assets involved in the divestment include the company’s operating interests in Darwin LNG, Bayu-Undan, Barossa and Poseidon fields. ConocoPhillips will additionally receive $75m in contingent payment from Santos, subject to final investment decision (FID) on Barossa development project.
The subsidiaries hold the company’s 37.5% interest in the Barossa project and Caldita field, 56.9% interest in the Darwin LNG facility and Bayu-Undan field, 40% interest in the Poseidon field. They also own the company’s 50% interest in the Athena Field.
ConocoPhillips executive vice-president and chief operating officer Matt Fox said: “While we believe the Darwin LNG backfill project remains among the lower cost of supply options for new global LNG supply, this transaction allows us to allocate capital to other projects that we believe will generate the highest long-term value to ConocoPhillips.”
According to the company, production associated with the assets under sale was approximately 50Mboe/d for the first half of 2019. The proved reserves were about 39Mboe by the end of 2018. Subject to regulatory approval and other specific conditions, the transaction is expected to conclude in the first quarter of 2020.
Santos managing director and CEO Kevin Gallagher said: “This acquisition delivers operatorship and control of strategic LNG infrastructure at Darwin, with approvals in place supporting expansion to 10Mtpa, and the low cost, long life Barossa gas project.
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By GlobalData“Santos intends to manage gearing within our stated operating range and is targeting to sell-down equity in Darwin LNG and Barossa to 40-50% in order to create alignment between joint venture participants as well as by optimising equity levels in our Western Australia assets.”
“The acquisition is value accretive for Santos shareholders in year one following completion across a range of metrics and importantly further reduces our free cash flow breakeven oil price by approximately $4 per barrel in 2020.”
