SANTOS AGREES TO SELL 5% STAKE IN PNG LNG TO STATE-OWNED KUMUL FOR $1.1 BILLION - WHY PAYING FOR SOMETHING THAT PNG ALREADY OWN?

SANTOS AGREES TO SELL 5% STAKE IN PNG LNG TO STATE-OWNED KUMUL FOR $1.1 BILLION 

Reporting by Sonali Paul, Editing by Louise Heavens 

Source link: https://www.reuters.com/markets/commodities/santos-agrees-sell-5-stake-png-lng-state-owned-kumul-report-2022-09-26/

MELBOURNE, Sept 26 (Reuters) - Santos Ltd (STO.AX) has agreed to sell a 5% stake in PNG LNG to Papua New Guinea's state-owned Kumul Petroleum for $1.1 billion in a deal to be announced on Tuesday, the Australian Financial Review reported late on Monday.

Santos declined to confirm the report. Kumul Petroleum could not be reached outside office hours.

Santos said in August it expected to reap proceeds from the sale of a 5% stake in PNG LNG "in line with market consensus valuation", which was around $1.5 billion.

There had been some speculation that Santos was under pressure to give away 5% of PNG LNG to Kumul Petroleum, but Santos Chief Executive Kevin Gallagher told Reuters in August: "Whoever is going to get 5% off us will pay the market value ... or we wouldn't sell it."

Santos became the largest shareholder in PNG LNG, Papua New Guinea's largest resource project, with its takeover of Oil Search last year.

With the selldown of 5%, Santos will own 37.5%, still ahead of Exxon Mobil Corp (XOM.N), the operator, with 33.2%. Kumul Petroleum will own 21.8%. The remainder is owned by a unit of Japan's JX Holdings Inc and PNG state-owned Mineral Resources Development Co.

The PNG LNG stake was one of three assets Australia's no.2 independent gas producer put up for sale this year aiming to raise up to $3 billion.

However it pulled the sale of a stake in the Pikka oil project in Alaska after failing to find a buyer at the right price. Plans to sell a stake in the Dorado oil project in Australia are on hold as Santos indefinitely delayed final approval for the development.

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