Santos agrees to sell up to 5% stake in PNG LNG

The news: Oil & gas producer Santos has agreed to sell a 5% stake in the PNG LNG to Papua New Guinea’s national oil company Kumul Petroleum Holdings through a staggered sale.

The numbers: Santos will initially sell a 2.6% stake to Kumul for a cash consideration of USD576 million ($888 million) and assumption of USD160 million of project finance debt. It will also give Kumul a call option, exercisable by June 30, 2024, to buy a further 2.4% stake for USD524 million plus a proportionate share of project finance debt.

The context: The deal comes after long-drawn negotiations and is part of the arrangement agreed with the PNG government when Santos acquired ASX-listed rival Oil Search in 2021. The PNG LNG project is operated by ExxonMobil. After the latest deal, Santos’s stake will drop to 37.5% but it will remain the largest investor, while the PNG state will own 22% shareholding.