Santos Sells Asian Assets to Ophir

Australian Santos said May 3 it has agreed the sale of its Asian gas assets to UK upstream company Ophir Energy for US$221mn.

“The sale of the Asian assets further delivers on our undertaking to simplify our business and focus on our five core long-life natural gas assets in Australia and Papua New Guinea,” Santos CEO Kevin Gallagher said.  The move will see Santos make country exits from Vietnam, Indonesia, Malaysia and Bangladesh. 

Assets to be sold to Ophir include the following interests:

• 31.875% in the Block 12W production sharing contract (PSC) (Chim Sao and Dua oil fields), Vietnam;
• 67.5% in the Madura Offshore PSC (Maleo and Peluang gas fields), Indonesia;
• 45% in the Sampang PSC (Oyong and Wortel gas fields), Indonesia;
• 20% in the Deepwater Block R PSC (Bestari oil discovery), Malaysia;
• 45% in the SS-11 PSC, Bangladesh; and
• 50% in Block 123 PSC and 40% in Block 124 PSC, Vietnam

The producing assets sold are relatively late-life and are not prioritised for capital in the Santos portfolio. Its share of production from the assets in 1Q2018 was 1.4mn barrels of oil equivalent.

“We have always believed the Asian assets are a quality portfolio and are pleased to achieve an attractive outcome for our shareholders. Santos will work with Ophir to ensure a smooth transition, including the transfer of all Santos employees to Ophir,” Gallagher said.

The transaction will have an effective date of January 1, 2018, with completion of the sale expected in 2H2018. It’s subject to customary consents and approval by Ophir shareholders, expected in June.

Ophir CEO Nick Cooper said: "The acquired assets also offer an attractive combination of operational upside and material cost synergies with our existing Southeast Asian production base.”

Santos’ five core, long-life assets which it is focusing on include the Gladstone LNG facility in Queensland, its Northern Australia business which includes a partnership in Darwin LNG, its Western Australia and Cooper Basin gas assets and interests in Papua New Guinea which includes the PNG LNG project. Ophir is focused on African and Asian upstream activities.