Santos reports that Kumul Petroleum Holdings Limited has made a legally binding offer to purchase a 5 per cent stake in PNG LNG for a total asset value of US$1.4 billion, including a proportionate share of project finance debt of about US$0.3 billion.
In a statement, Santos said Kumul is the national oil and gas company of Papua New Guinea (PNG) and a current partner in the PNG LNG project.
Santos received a payment from Kumul of US$55 million to secure the offer. According to Santos, the money will be kept in escrow and delivered to Santos as a deposit for a portion of the offer price if it accepts the offer.
The offer is subject to Kumul receiving from each other PNG LNG project participants the waivers of certain pre-emptive rights required by the project operating agreement for the transaction to go through, Santos added.
The offer shall remain open for acceptance until 31 December 2022, and it is expressly stated to be irrevocable, save in certain instances. Regarding the sale of equity in PNG LNG during the time, Santos has agreed to work only with Kumul.
The planned agreement will go into effect on 31 December 2022, and Santos will keep all cash flows from that year. The completion will depend on customary circumstances, such as Kumul obtaining funding and receiving the required regulatory clearances.
The prospective sale would raise the State’s equity stake to about 22 per cent, furthering the goals of the PNG Government to give the country’s citizens a more significant stake in developing its natural resources.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said that the prospective sale of a 5 per cent stake in PNG LNG to Kumul represents a chance to form a strategic alignment for developing PNG’s natural gas resources in the future, mainly through 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. Following the transaction, Santos would maintain a 37.5 per cent interest in this world-class project. Santos has been a committed partner in PNG for over 40 years, involved in more than 30 different licenses and has significant community partnerships and projects across the nation,” Gallagher stated.
Santos and Kumul will construct a Heads of Agreement as part of the proposed deal to work together more closely on the growth of Kumul’s regional capacity and competence, including prospects for carbon emission reduction to achieve net zero operations.
