Santos has signed a binding sale agreement with Kumul Petroleum Holdings Limited for a 2.6% stake in PNG LNG, with a total purchase consideration of $576 million and approximately $160 million of project finance debt.
“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,” Santos Managing Director and CEO Kevin Gallagher said.
Completion of the Sale Agreement is not subject to financing and is merely conditional on the approval of the PNG competition regulator on or before 31 December 2023. Kumul has placed $80 million in escrow with Santos as part of the acquisition price under the Sale Agreement. Kumul has agreed to make additional escrow payments of the acquisition money until the transaction is completed.
Furthermore, Santos has agreed to provide Kumul a call option to acquire an additional 2.4% participating stake in PNG LNG for $524 million in cash (plus a proportionate share of project finance debt) (Call Option).
The Call Option must be exercised on or before 30 June 2024 and is conditional on fulfilling the Sale Agreement and satisfying customary conditions, such as applicable regulatory clearances and third-party consents.
On 27 September 2022, Santos reported that it had received a binding conditional offer from Kumul to acquire a 5% stake in PNG LNG.
The offer, as well as the exclusivity agreements with Kumul, have now expired. The financial terms and effective date of today’s transactions are consistent with the conditions of the prior offer, which included the transfer of project finance debt.
“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,” Gallagher said.
PNG Prime Minister James Marape commented, “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.”
