HARBOUR ENERGY has made a A$13.5bn (US$10.4bn) bid for Australian oil and gas producer Santos.
Harbour Energy, which is backed by energy-focussed private equity group EIG, has offered A$6.50 a share and follows three previous unsolicited offers that opened with A$4.55 a share in August last year. The latest offer has been strong enough to entice Santos to the table, with the board confirming it will now engage with Harbour Energy, noting the bid is now in the interests of shareholders. Santos has allowed Harbour to undertake due diligence.
Harbour Energy has said it wants to use Santos as a platform for growth in Australia, throughout Asia, and with respect to the global LNG sector.
“Santos has a leading natural gas business in Australia and interests in three operating LNG projects – two in Australia and one in Papua New Guinea – along with an established operating capability and a proven, experienced management team. All of these components are valuable assets and important to the execution of our vision and strategy,” said Harbour Energy CEO Linda Cook.
The company said if it successfully takes over Santos its strategy does not rely on staff cuts and it will keep its headquarters in Adelaide.
Santos’ activities cover exploration and production and delivery of oil and natural gas. This includes its partnership in a two-train LNG project in Papua New Guinea that sells gas to Asia. In Australia it produces gas both on- and offshore. This includes gas piped from offshore to LNG plants in Gladstone and Darwin, as well as gas sold domestically from fields in the Cooper Basin spanning the borders of South Australia and Queensland.
RBC oil and gas analyst Ben Wilson said he expects Santos will struggle to turn down the offer, describing it as a “knock-out bid”, ABC News reports. However, he did note that given Santos’ strategic importance to gas supply, any bid will be subject to scrutiny from Australia’s Foreign Investment Review Board.
The offer follows Harbour-backed Chrysaor’s purchase last year of US$3.8bn worth of North Sea oil and gas assets from Shell, making it the region’s largest independent exploration and production company.