ConocoPhillips Sells Australia-West Assets, Ops to Santos for $1.3B

ConocoPhillips Sells Australia-West Assets, Ops to Santos for $1.3B
Due to market volatility and deferring Barossa FID, the companies agreed to lower the initial upfront payment.

ConocoPhillips has completed the sale of its subsidiaries that hold its Australia-West assets and operations to Santos for a reduced purchase price of US$1.265 billion plus an increased contingent payment of $200 million subject to a final investment decision (FID) on Barossa.

Due to market volatility and the deferral of Barossa FID, the companies agreed to lower the previously announced $1.39 billion upfront payment at completion to US$1.265 billion and increase the contingent payment on Barossa FID from US$75 million to US$200 million.

“Santos has a strong presence in the Australian oil and gas industry and is already a co-venturer in the Bayu-Undan, Darwin LNG and Barossa projects” said Matt Fox, ConocoPhillips executive vice president and chief operating officer. We are pleased to close this sale with an Australian company that will help continue the development of Australia’s oil and gas resources. ConocoPhillips has more than two decades of local operations success in Australia and we look forward to continuing our presence in the nation with our Australia Pacific LNG project and exploration activities.”

The assets represent production of 46 thousand barrels of oil equivalent per day for the first three months of 2020, and proved reserves were approximately 17 million barrels of oil equivalent at year-end 2019. Through the acquisition, Santos’ interest in Bayu-Undan and Darwin LNG increases to 68.4% at completion and will provide a significant boost to 2020 production and cash flows. Santos’ interest in the Barossa project to backfill Darwin LNG also increases to 62.5%.

“As a foundation partner in Bayu-Undan and Darwin LNG, and an existing partner in Barossa, we know these assets well,” Santos managing director and CEO Kevin Gallagher said in a statement. “We are delighted to assume operatorship and continue to progress the Barossa project so that a final investment decision can be made when market conditions permit.”

“We welcome the ConocoPhillips’ Australia-West employees to Santos and look forward to getting on with the process of integrating our two businesses to create one high performing team,” Gallagher said.

Santos previously announced an agreement to sell a 25% interest in Darwin LNG and Bayu-Undan to SK E&S for $390 million and its intent to sell a 12.5% interest in Barossa to JERA.

“Santos continues to build alignment between the Darwin LNG and Barossa joint ventures,” Gallagher added. “Following completion of the previously announced sell-downs to SK E&S and JERA, Santos will hold a 43.4% interest in Darwin LNG and a 50% interest in Barossa.”

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