Santos, Kumul Petroleum amend deal on sale of PNG LNG stake

Australia’s Santos on February 1 announced an amendment to the agreement with Kumul Petroleum, a state-owned entity in Papua New Guinea (PNG), regarding the sale of a 2.6% stake in PNG LNG, allowing the latter to pay for a partial shareholding.

Kumul has paid $352mn to Santos, representing approximately 1.6% interest in the project. The amendment provides additional time for Kumul to pay the remaining purchase price of $241mn.

Until the final completion of the transaction, Santos will retain control of the entity holding the 2.6% stake. Additionally, to assist Kumul in purchasing the remaining interest, future project distributions associated with the 2.6% stake sold to Kumul will be applied toward acquiring the remaining interest.

The initial sale was announced by Santos last year, involving a total sum of $736mn. This includes a cash component of $576mn and the assumption of approximately $160mn in project finance debt. Santos had in September 2022 received a binding conditional offer from Kumul for the acquisition of a 5% interest in the PNG LNG project for a total asset value of $1.4bn. This valuation included a proportionate share of the PNG LNG project finance debt, estimated at around $300mn.

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.