Kumul Petroleum offers $1.4bn to acquire 5% of PNG LNG
Australia’s Santos on September 27 said it has received a binding offer from Papua New Guinea’s (PNG) Kumul Petroleum Holdings to acquire an additional 5% interest in PNG LNG for $1.4bn, including a proportionate share of project finance debt of approximately $300mn.
To secure the offer, Kumul has paid an amount of $55mn to Santos which will be held in escrow to be released for part payment if the deal goes through. Kumul is PNG's national oil and gas company and holds a 16.8% interest in the PNG LNG project.
The offer is conditional on Kumul obtaining the waivers of certain pre-emptive rights by each other PNG LNG project participant under the project operating agreement to allow the transaction to proceed, Santos said.
The offer will remain open for acceptance until December 31. Santos said it has agreed to deal exclusively with Kumul during this period regarding the sale of equity in PNG LNG.
Santos CEO Kevin Gallagher said the potential sale of a 5% interest in PNG LNG to Kumul represents an opportunity to build strategic alignment for the future development of PNG's natural gas resources, including via PNG LNG infrastructure.
"PNG LNG is a low-cost and low emissions intensity asset that contributes strong cash flows to the project participants and economic and social benefits to the nation," Gallagher said. "Following the transaction, Santos would maintain a 37.5% interest in this world-class project.”
As part of the proposed transaction, Santos and Kumul will negotiate a heads of agreement to further collaborate on the development of Kumul's regional capacity and capability, including carbon emission reduction opportunities to achieve net-zero operations.
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 last year.