Santos rejects offer from Scepter

The results come a day after Santos announced to the ASX that it had received a $6.88 per share offer from Bermuda-based investment syndicate, Scepter Partners, on 20 October.

Santos said the bid was “opportunistic in nature and did not reflect the fair underlying asset value of the company”.

Mr. Steains commented, “Scepter considers that this Indicative Proposal, if implemented, would provide Santos shareholders with an attractive premium and the certainty of cash in the face of significant future uncertainty”.

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This is the first time Santos disclosed buyer interest since it put its assets on sale in August to reduce its A$7.5 billion debt pile.

Scepter is backed by ruling families of Brunei and the United Arab Emirates. It said the A$6.88-a-share bid was “opportunistic” and undervalued its assets, which include its flagship Gladstone gas-export project on Australia’s east coast, shared with Total SA, and a stake in an Exxon Mobil Corp.-led gas development in Papua New Guinea.

Santos is among several companies that bet big on feeding Asia with natural gas, anticipating continued growth in developing nations’ need for energy and for cleaner-burning fuels.

News of the rejection sent shares in the firm soaring 20.6 percent to AU$6.56 after opening in Sydney, before easing slightly to end 16.18 percent higher at AU$6.32. Santos shares, which lost more than half its market value in the year to Wednesday, surged as much as 21% today, the most since March 1986. “The question is by whom”, IG’s market strategist Evan Lucas said.

“I don’t think the board will see any price sub-A$10 as fair value considering Gladstone is now up and running”, he added, referring to a new liquefied natural gas venture in Australia.

Santos chairman Peter Coates and departing ceo David Knox have their hands full with Scepter Partners making a tilt. But the drop in oil prices meant sales revenues were 24 per cent down from the third quarter past year, at $808 million.

Santos has been advised by Scepter that it is a direct investment business whose stakeholders include a standing syndicate of ruling families, ultra-high-net-worth industrialists and sovereign wealth funds.

Scepter represents over $14 billion in discretionary assets and over $100 billion in net worth of its core stakeholders, according to information on its website.

Last month, Oil Search rejected an all-stock offer from Woodside, which had sought to build a regional oil-and-gas champion by adding the Papua New Guinea-focused energy company. Brunei’s Prince, Abdul Ali Yil Kabier, is the founder and director of the firm with financier Rayo Withanage.