Place your Ad Here!

Oil Search Considering Merging with Santos

by PNG Business News - July 22, 2021

Photo Credit: Santos Ltd

Santos, an Australian oil firm, announced its plan to combine with Oil Search Limited.

Santos proposed a non-binding indicative merger last month with the goal of making the two companies the regional energy champions. The proposed merged entity has a market capitalization of A$22 billion (K56 billion), putting it among the top 20 ASX-listed companies and the top 20 global oil and gas companies.

This means, among other things, that the merger will have a diverse portfolio of high-quality, long-life assets spanning Australia and Papua New Guinea, a solid balance sheet with ample cash to support expansion choices, and an investment-grade credit rating.

The merger plan, if approved, would be conducted through a Scheme of Arrangement in which Oil Search shareholders would receive 0.589 new Santos shares for each Oil Search share held, according to Santos in a market disclosure to the Australian Stock Exchange. 

Following the scheme's acceptance, Oil Search shareholders would control 37% of the combined company, while Santos shareholders would own 63%.

Based on Santos' closing price on June 24, 2021, the ownership ratio suggested a transaction price of A$4.25 (10.92) per Oil Search share.

This was a 12.3% premium to the Oil Search closing price of A$3.78 (K9.72) on June 24, 2021, and a 9.8% premium to the Mubadala block trade selling price of A$3865. (K9.92).

Kevin Gallagher, managing director and chief executive officer of Santos, said the merger will bring more alignment to PNG, allowing for the development of important projects such as Papua LNG, as well as the creation of new employment and support for the local economy.

Santos, according to Gallagher, has proposed a true merger in which ownership of the combined firm is based on proportionate contribution and value.

“The strategic rationale for a merger is clear and offers superior value to Oil Search shareholders rather than continuing on a standalone basis.

“Santos continues to believe that the Merger Proposal represents an extremely attractive opportunity to deliver compelling value accretion to both Santos and Oil Search shareholders.”

Oil Search stated in its ASX market update that it is open to receiving and engaging with any proposal that is in the best interests of its shareholders. While the company's board of directors agrees with Santos that combining the two firms makes strategic sense, the conditions must be fair to the company's shareholders, which the terms proposed by Santos are not.

Despite Santos shareholders holding 70% more shares than Oil Search shareholders, Oil Search maintains that the proposed conditions provide just a 6.8% premium based on Friday's closing share prices for Oil Search and Santos.

According to the firm, no such proposal has been made at this time.

 

Reference: Post-Courier (21 July 2021). "Oil Search Open To Merger with Santos". 



Related Articles

Oil and Gas

PNG Business News - December 19, 2019

200 Companies Show Interest In Pasca A Gas Project

About 200 companies have shown interest in the Gulf of Papua Pasca A gas project. This was after developer Twinza put out an expression of interest for companies to provide services to the project. Both local and foreign owned companies have shown interest to provide services during the construction and operation of the country’s first ever offshore gas project. Twinza Oil and Gas project development manager Erik Kowa said they are now categorising these companies according to the types of services they will be rendering. Mr Kowa said this is part of the company’s mission to support the government’s call on local content and is something they are striving to meet. He said as a result they have gone out with an expression of interest and have already received an overwhelming response. “From the PNG companies that have responded, we look at how qualified they are to participate in our tender process when we come to it. We sort of look at their capabilities and strengths, accreditations, PNG employee content and also experience, track record and of course preferences. “We just sort of done a desktop screening and while we get more certainty with approval from the project going forward, we’ll try and talk to some of you who have responded to find out what are the challenges and if you happen to be qualified according to our screening. We will try and understand what the story is and see if our assessment is valid, or if not we will see what we can do to get it done going forward,” Kowa said. “We are going through that to try and ensure that we give a fair go to companies who are here for the long term. “This is to ensure that we are supporting PNG’s young population in employment and we want it to be established not only for the project but in the long term,” he added. “We are working very hard to try and get the government’s approval’s out of the way so we can move forward.” Continue reading at https://postcourier.com.pg/200-companies-show-interest-in-pasca-a-gas-project/ | Post Courier

Oil and Gas

PNG Business News - March 23, 2021

Minister Says Pasca Talks In Progress

Twinza's Pasca is the topic of negotiations. According to Petroleum Minister Kerenga Kua, a plant in the Gulf is currently underway. Kua predicted that reaching an agreement on the country's first offshore oil project would take some time. “(Project) still under negotiations,” he said. “Generally, it could take a few years to negotiate an agreed position. Once in a while, it takes less time. Patience is important to all sides.” Twinza has previously stated that the talks were over the fiscal terms for the construction of the gas-condensate field in the Gulf of Papua. “The company is committed to working collaboratively with the Government to deliver an agreement that allows the project to move forward toward development, while providing a higher state take than previous projects,” country manager Roppe Uyassi said. “Once the Pasca A gas agreement and the petroleum development license are in place, the project is well-positioned to enter the front-end engineering and design phase later this year.” Twinza was also excited to discuss significant non-financial prospects with the SNT, such as domestic business commitment, third-party access to infrastructure, and national material. “These matters were differentiated from land-based projects as Pasca A field is planned to be the first offshore development in PNG.” Meanwhile, according to company records, Twinza's main asset is the offshore Pasca A liquids-rich gas field. The Pasca A field development plan had been completed, the petroleum inventory had been approved, and the program to receive full-field development licenses had been completed. The Pasca A development will become the country's first offshore field development after all requisite government approvals are issued.

Oil and Gas

PNG Business News - December 21, 2020

Kumul Petroleum Hopes to Work with Developers of Papua LNG Project

Kumul Petroleum Holdings Ltd (KPHL) hopes to work with the developer of the Papua LNG Project and its partners.According to Managing director Wapu Sonk, KPHL hoped to work with Total and the Papua LNG joint venture partners to start the front-end engineering design work and begin the liquefied natural gas (LNG) financing and marketing work.It can be recalled that Petroleum Minister Kerenga Kua has said that an announcement would be made where the Papua LNG Project would be a stand-alone project towards next year’s design phase. He said that a meeting would be held between the government and the Total senior management this month. “If the decision is made, it will be positive for PNG because we will begin to see some early work going on,” Kua said.The country’s national gas and oil company, KPHL is in charge of managing the State’s 16.57 per cent equity in the ExxonMobil operated US$19 billion (K64.91 billion) PNG LNG project. This has allowed the firm to become the third-largest player in the largest single investment made by the country. Sonk added that even with this pandemic, there had been no material impact on the project and its operations, besides a few delays in various areas. “PNG LNG project performed very well in terms of LNG production,” he said. “The main challenge has been LNG prices, which has been very low in Q1 to Q2 and in the third and fourth quarter, the prices have improved to approximately US$6.40 to US$7.50/MMbtu (K21.98 to K25.76 million British thermal units) from as low as US$2.40/MMbtu (K8.24/MMbtu) early this year. LNG and oil price has impacted all the joint venture partners and us at Kumul Petroleum as well as with MRDC (Mineral Resources Development Company), no exception. PNG Government also is impacted as a result.He said, “We hope that the oil and LNG prices will recover and be stabilised given there is now a vaccine for the Covid-19. ExxonMobil maintains the great job in optimising and improving production in a safe and environmentally friendly manner.”Sonk added that KPHL paid K200 million as dividend due to better cost commodities last year. “We have been able to continue to train Papua New Guineans at the Kumul Petroleum Academy, deliver cheap and reliable power into Port Moresby through NiuPower, delivered the rural electrification programme mostly in Hela and Southern Highlands connecting Nipa to Tari, Tari to Koroba and Tari to Hides (Juni) and Ialibu to Kagua,” he said.


Recent Articles

Agriculture

PNG Business News - July 21, 2021

Study Says Sweet Potato Growers Have Received Significant Insights into Customers Buying Habits

In Papua New Guinea (PNG), sweet potato (kaukau) growers have received significant insight into customer buying habits, which is assisting them in identifying new market possibilities. The recent market analysis, which was supported by the Papua New Guinea-Australia Partnership and conducted by the Australian Centre for International Agricultural Research, revealed that an increasing number of consumers in Port Moresby prefer to buy fresh produce from supermarkets, citing convenience and safety as reasons. While this trend may result in fewer consumers at conventional farmer markets, PNG and Australian experts believe it may open up new marketplaces for rural people. “Farmers are looking for stable markets where they can receive more consistent prices for better-quality produce,” said Professor Philip Brown from Central Queensland University (CQU), who is leading the research project.  “The research shows that consumer behaviour is likely to support an expansion in the supermarket sector in large urban centres and this is positive news for the farmers. This could allow commercial focused farmers to secure more stable market access.” The study of 353 customers was conducted as part of ACIAR-funded sweet potato research sponsored by CQU and the PNG National Agriculture Research Institute (NARI), which aims to improve sweet potato value chains by increasing the quality of harvested roots. Sweet potato quality and production are improving, resulting in increasing supplies to retailers eager to provide better fresh produce. “The project, with support from the Fresh Produce Development Agency and NARI, is helping farmers to build their business skills and connect with emerging supermarket opportunities,” said Professor Brown. Kirt Hainzer, a CQU researcher who collaborated on the survey alongside NARI researchers, said it was the first study to look at customer behaviour and see what role stores may play in the development of PNG's commercial sweet potato sector. “The research sought to better understand and compare how consumers buy staples from open markets and supermarkets and to explore the preferences for purchasing staple foods as supermarkets increase the availability of convenience staples like rice,” said Hainzer. “Although expanding formal sales represents a huge step forward in developing a commercial sweet potato industry, continued research on consumer preferences and the market for fresh produce will help better understand trends in staple food purchasing and what market opportunities exist for growers.” With over a hundred kinds of sweet potato in the nation, NARI economist Raywin Ovah said the study sought to find out which of these customers preferred. “Not all the varieties are preferred from a consumer point of view. There are only a few that consumers want to be based on the taste or health properties and that is what we want to also find out. Farmers can be provided with that information, so they produce those varieties that the market wants.” One of five initiatives under the Transformative Agriculture and Enterprise Development Program is a project to increase commercial sweet potato production and commercialization in the PNG highlands. The ACIAR program, which is funded by Australia in collaboration with the government of Papua New Guinea, aims to improve the livelihoods of rural men and women through private sector-led development, increased agricultural productivity and quality, and the development of individual and institutional capacity.   Reference: Loop (20 July 2021). “Study looks into sweet potato industry”.

Mining

PNG Business News - July 21, 2021

Garry: MRA Evaluating K50 Billion Worth of Investments

According to managing director Jerry Garry, the Mineral Resources Authority is evaluating more than K50 billion in investments in the country. Wafi-Golpu, Frieda River, and Woodlark are among them. “We are also looking at the Central Lime and Cement,” he said. “If that project comes on-stream, it will be one of the first industrial mines ever built in the country.” Garry was speaking at a Port Moresby consultation session on the Mine and Works (Safety and Health) Bill 2021. PNG, he added, was home to some of the world's largest mines. “We have grown from strength to strength,” he said. “If you compare the Bank of PNG statistics, the mining sector alone, in terms of production, has exported over K17 billion in 2020 and 2019. “So it’s a huge industry that we are trying to regulate and manage.” Garry expressed gratitude to the industry for making safety a primary priority. “They have been taking health and safety at the workplaces very seriously,” he said. “We must not only consider (the workers) and the environment but also people living around the (areas) we operate in. “And if we are using any hazards, we must also take responsibility.” The newest mining methods in Wafi-Golpu, known as block cave mining, are one of the new things to expect, according to Garry. “New mining hazards will come with this new mining method,” he said.   Reference: The National (20 July 2021). “Authority assessing investments worth K50bil”.

Business

PNG Business News - July 21, 2021

Credit Corp Names Richard Sinamoi as Interim Chairman

At the annual general meeting last month, the board named Richard Sinamoi as interim chairman. “There has been an orderly transition to new leadership and the new board is stable and strongly aligned in our thinking,” Sinamoi said. He described becoming chairman of Credit Corporation as an "honour" at "such a critical period for the business and the financial services sector." “Throughout this challenging period due to the Covid-19 pandemic, maintaining our balance sheet strength and supporting our small-medium enterprise customers in the Pacific have been key strategic priorities,” he said. “Our customers have generally displayed a high degree of resilience throughout this period. “However, some continue to be challenged by restrictions and changes to consumer behaviour. “As a director, I have been fortunate to have worked with the current board members in helping to contribute to Credit Corporation successive results over the years.” Sinamoi acknowledged the outgoing chairman Syd Yates and welcomed newly-elected directors Stephen Humphries and Sir Melchior Togolo. “I look forward to my ongoing work with the board, management and the entire Credit Corporation team to continue our mission to support SMEs (small to medium enterprises) throughout the Pacific with their financial needs. “The board is currently working with our interim CEO Danny Robinson and chief financial officer Jeff Undah as we undertake a review of the group’s strategy to ensure we are well-positioned to seize the opportunities presented as we transition out of the Covid-19 pandemic.”   Reference: The National (20 July 2021). “Sinamoi is chairman of Credit Corp”.

Join Papua New Guinea's

Business Community

Be the "First" to get our exclusive Digital Magazine & Weekly Newsletter.