Kumul extends exclusivity period for PNG LNG deal
Australia’s Santos on May 1 said it has been advised by PNG state-owned Kumul Petroleum that the latter has now extended the exclusivity period to buy a 5% stake in the PNG LNG project to August 31.
Santos had in September received a binding conditional offer from Kumul to acquire a 5% interest in PNG LNG for an asset value of $1.4bn, including a proportionate share of PNG LNG project finance debt of approximately $0.3bn. The exclusivity period was initially open until the end of December and was later extended till April 30.
Santos has agreed to deal exclusively with Kumul during this period regarding the sale of equity in PNG LNG. Kumul has agreed it will work closely with Santos during this extension period in order to assist it in arranging the finalisation of its acquisition financing with third parties. There is also strong support from both the government and the joint venture partners for the transaction proceeding, Santos said.
Santos CEO Kevin Gallagher said PNG LNG continues to represent compelling value for shareholders.
"With the significant changes in the global energy landscape over the last 12 months, PNG LNG remains a world-class asset that is low-cost, low emissions intensity and delivers reliable LNG supply to our customers in Asia," Gallagher said.
"While the PNG project is a very valuable asset and Santos' balance sheet is strong, Santos remains committed to selling five per cent equity in the project to support the PNG government to achieve the nation's equity objectives," he added.
PNG prime minister James Marape said, "I am fully supportive of continuing the transaction to purchase five per cent of PNG LNG in pursuing PNG national interest and its nation building programmes. Given the volatility in the financial markets and high interest rate environment, I support Kumul's request for a time extension to complete the transaction. With credible private sector lenders significantly advanced, I am confident that Kumul will secure an appropriate financing package."
The PNG LNG joint venture comprises operator ExxonMobil (33.2%), Santos (42.5%), Kumul Petroleum (16.8%), JX Nippon Oil (4.7%) and the PNG landowner company MRDC (2.8%). Santos became the largest shareholder in PNG LNG with its takeover of Oil Search.