Page 10 - GLNG Week 11

GLNG AUSTRALASIA GLNG
Santos agrees to stake sales
INVESTMENT
AUSTRALIAN developer Santos has agreed to sell down its stake in the Darwin liquefied nat- ural gas (LNG) terminal and the Bayu-Undan gas field once its acquisition of ConocoPhil- lips’ northern Australian gas assets has been finalised.
Santos said on March 12 that it had agreed to sell a 25% stake in both projects to South Korea’s SK E&S for $390mn, with the deal being back- dated to October 1, 2019.
The Australian independent agreed in Octo- ber 2019 to buy US super-major ConocoPhillips’ operated interests in Darwin LNG and Bayu-Un- dan as well as the Barossa and Poseidon offshore natural gas projects. Santos said at the time that it had agreed to pay $1.39bn for the assets as well as a $75mn contingent payment subject to a final investment decision (FID) on the Barossa development.
ConocoPhillips owns a 56.9% stake in Dar- win LNG and Bayu-Undan as well as 37.5% of the Barossa development. The US super-major also operates the Poseidon exploration project with a 40% stake.
Because the deal with ConocoPhillips carries an effective sale date of January 1, 2019 and the deal with SK E&S has been backdated to Octo- ber 1, 2019, Santos expects to receive around $120mn in cash flow during its nine-month ownership of the 25% stakes in Darwin LNG and Bayu-Undan.
Santos said its agreement with the South Korean company hinged up the successful com- pletion of the ConocoPhillips deal as well as third-party consents, regulatory approvals and the Barossa FID.
Santos, which already owns an 11.5% stake in Darwin LNG and Bayu-Undan as well as 25% in Barossa, is eager to reduce its anticipated posi- tion within the latter project.
Santos MD and CEO Kevin Gallagher said: “Santos continues to build alignment between the Darwin LNG and Barossa joint ventures through discussions with Darwin LNG partici- pants and others to acquire equity in Barossa. We are in advanced discussions to sell down equity in Barossa to a target ownership of around 40% to achieve increased partner alignment.”™
Oil Search slashes budgets in response to price crash
INVESTMENT
Oil Search says it has assumed that activities related to the expansion of PNG LNG are currently minimal.
AUSTRALIA-LISTED developer Oil Search has slashed its projected capital and investment expenditure for 2020 in response to falling inter- national oil prices.
International benchmark Brent crude has sunk to four-year lows owing to the coronavi- rus (COVID-19) pandemic as well as OPEC+’s failure to agree on production cuts on March 6. Brent sunk below $30 per barrel on March 16 for the first time since early 2016.
Oil Search said on March 18 that it would respond by reducing its expected capex for 2020 by 44% to $200-300mn and its investment spending by 38% to $440-530mn.
While the company will maintain current production levels at its Papua New Guinea (PNG) projects, it has suspended all non-essen- tial projects and has deferred planned explora- tion work.
Commenting on the planned $13bn expan- sion of ExxonMobil’s PNG LNG facility, which is being spearheaded by both ExxonMobil and Total, Oil Search said: “At present, we have assumed that activities on LNG expansion are minimal.”
The expansion had already run into trouble in late January, when the government walked away
from talks with ExxonMobil on the P’nyang gas field, which is a key pillar of the development. Under the proposed expansion, one train will use gas from the P’nyang and PNG LNG fields as feedstock, while two trains will use gas from the Total-led Papua LNG project.
Energy consultancy Rystad Energy said earlier this month that the breakdown in talks would likely delay first production from Papua LNG to 2026 and the PNG LNG expansion to 2029.
Oil Search noted this week that ExxonMobil had said it also intended to slash discretionary spending.
Oil Search said it had also suspended early development work at its Pikka project in Alaska and that it would not carry out any further exploration there. The company has also sus- pended plans to divest a 15% stake in its Alas- kan assets.
Commenting on the company’s budget cuts, Oil Search managing director Keiran Wulff said: “While Oil Search is fortunate to have world- class assets, these unprecedented times require us to take immediate and decisive steps to posi- tion us for a potentially extended period of lower oil prices and business uncertainty.”™
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w w w . N E W S B A S E . c o m Week 11 20•March•2020