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Santos acquires Quadrant Energy

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LNG Industry,

Santos has released a statement claiming that it has acquired 100% of Quadrant Energy for US$2.15 billion, plus potential contingent payments related to the Bedout Basin.

Santos claims that the acquisition is fully funded by existing cash resources and new committed debt facilities, with rapid de-gearing expected to <30% by the end of next year. Highlights from the statement also include the following:

  • Value accretive acquisition of long-life WA conventional natural gas assets with stable cash flows.
  • The acquisition is consistent with the company's growth strategy of building on existing infrastructure positions around core assets to deliver sustainable shareholder returns.
  • It also advances the company’s plans to become Australia’s leading domestic natural gas supplier.
  • The acquisition also increases proforma 2P reserves1 by 220 mmboe, up ~26% and proforma annual production2 by 19 mmboe, up ~32%.
  • Significant portfolio overlap with Santos provides combination synergies estimated at US$30 million/yr – US$50 million/yr (excluding integration and other one-off costs).
  • Upside through further material synergies, near-term developments and exploration.
  • Material earnings, cash flow and value per share accretion.
  • Opportunities to leverage Quadrant’s offshore operating capability across Santos’ Western Australia and Northern Australia portfolio.

Kevin Gallagher, the Managing Director and CEO of Santos, said: “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 materially value 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/bbl and Quadrant's stable cash flows provide increased certainty during the upcoming period of major growth project delivery.

“We look forward to welcoming Quadrant’s staff to the Santos family and integrating our Western Australian operations.”

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