Santos has announced that it will sell Kumul Petroleum (PNG Government Owned) a 2.6% share in the Papua New Guinea LNG Project. Kumul also has a future option to purchase an additional 2.4% interest.
Santos Ltd (ASX: STO) today announce that it has executed a binding sale agreement to deliver a 2.6 percent participating interest in Papua New Guinea LNG Project to Kumul Petroleum Holdings Limited for a total purchase consideration of $576 million in cash and the assumption of approximately $160 million in project finance debt.
The Sale Agreement is not contingent on financing and is expected to close on or before 31 December 2023, pending approval by the PNG competition regulator. After agreeing to make additional pre-payments of the purchase consideration into escrow with Santos, Kumul has deposited $80 million as a partial payment of the purchase consideration under the Sale Agreement.
Santos additionally committed to let Kumul exercise a call option to buy an additional 2.4% stake in Papua New Guinea LNG Project from them for $524 million (plus their share of the project’s financing costs). The Sale Agreement must have closed and customary requirements, such as the receipt of required regulatory clearances and third-party consents, must have been met in order for the Call Option to be exercised by June30, 2024.
A binding conditional offer from Kumul to acquire a 5% stake in Papua New Guinea LNG Project was announced by Santos on September 27, 2022. The time limit on this deal and Kumul’s exclusivity provisions have long since passed. The exchange of project finance debt is included in the financial terms and effective date of the transactions announced today, which are commensurate with the conditions of that previous offer.
Kevin Gallagher, the MD and CEO of Santos, made the following statement:
I am pleased we’ve reached a binding agreement with Kumul on the sale of up to 5% of PNG LNG. This re-structured transaction is a pragmatic solution that provides a clear pathway to completion and builds our strategic alignment with Kumul and our long friendship with PNG, where Santos has been a committed corporate citizen for over 40 years
PNG Prime Minister James Marape said:
Papua New Guinea LNG Project 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. PNG Prime Minister James Marape welcomed the Agreement. This transaction will increase Kumul’s interest in PNG LNG and supports the PNG government objectives for the people of PNG to have a greater equity interest in the development of their natural resources
About Santos Ltd
Santos is a worldwide energy corporation with activities in Australia, Papua New Guinea, Timor-Leste, and North America. The company is dedicated to producing energy and fuels in an ever-increasingly environmentally friendly manner.
