Santos completes strategic review, appoints CEO

Australia’s Santos Ltd revealed plans on Monday to raise A$3.5 billion ($2.5 billion), mainly from a massive share sale, thumbing its nose at a full takeover as the indebted oil and gas firm tries to shore up its funding.

Santos unveiled a suite of initiatives this morning, including a new equity raising, private placement and stake sale created to reduce the company’s overall net debt.

“He is ideally suited to lead Santos as we move from a focus on major strategic developments to delivering strong operational results in a continuing low oil price environment”.

The embattled company on Monday said it will raise $2.5 billion through a rights entitlement offer, sell $500 million worth of shares to China-based private equity firm Hony Capital, and sell its 35 per cent stake in Victoria’s Kipper gas field to Japan’s Mitsui.

“The review has shown that we can further streamline the business and enhance financial discipline and the board is absolutely committed to pursuing those opportunities”, he said. Santos asked the halt remain in place until November 12.

The oil price was just under $US45 a barrel at the time of the bid and is still close to that level now, having run up to $US48 between times, so in simple terms the Santos share price has outperformed the oil price since the bid was announced.

It has also appointed former Woodside executive Kevin Gallagher as new chief executive to replace David Knox, who resigned in August.

It also comes on the heels of a $7.1 takeover bid last month from overseas fund Sceptre, backed by members of the ruling families of Brunei and the United Arab Emirates.

Mr Coates said debt would be reduced by a total of $3.5 billion and this would come through three elements.

“We expect inbound interest may continue and we will respond accordingly in the normal course”.

The strategic review is investigating selling a few of the company’s key assets to pay down its growing debt.

While LNG sales volumes doubled in 2015, exceeding 1 million tonne, 3Q production was 4% higher than the corresponding quarter with 14.5 MMboe.