February 1, 2016

Santos to sell PNG LNG stake

 SANTOS is understood to be reviving attempts to sell its stake in the PNG liquefied natural gas project in a deal that could net the oil and gas producer about A$1.5 billion (K3.17 billion).
It comes with suggestions that Santos would announce an aggressive move to slash spending on its Cooper Basin and Gladstone LNG upstream assets when it reports earnings on February 19.
On the agenda is an internal cost-cutting target of 30 per cent, as talks with potential Japanese suitors for the PNGLNG stake progress, sources said.
The latest suggestions come as Kevin Gallagher starts as the new chief executive at Santos to replace outgoing Santos boss David Knox.
Gallagher has been tasked with a major cultural overhaul, entrenching a commitment to a low-cost approach across the business. A string of job cuts has already occurred across Santos, and the group was thought to be well-capitalised after tapping the market for $3billion (K9.1bn) last year and reaping $520 million (K1578.9m) from divesting its Kipper gas assets.
Should attempts to sell the Santos PNG stake prove to be unsuccessful, other assets may instead be divested, they said.
Santos has a 13.6 per cent stake in PNG, but could only divest 3.6 per cent to ensure it kept its rights to have operational control.
In the absence of a sale of the PNG stake, another theory is that another equity raising may be required.
Japan’s Marubeni has previously been mentioned in connection to a sale of PNG LNG, seen as the jewel in the crown for Santos.
– The Australian