Australian Santos to Hive Off Non-Core Assets

Australian oil and gas major Santos has decided to spin off its non-core assets and reduce debt as the company looks to become “a low-cost, reliable and high performance business.”

Santos MD and CEO Kevin Gallagher December 8 said the company will implement a three-phase strategy to enhance shareholder value. It plans to focus on five core, long-life natural gas assets: Cooper Basin, Gladstone LNG project, Papua New Guinea projects, assets in northern Australia and Western Australia gas resources. “The remaining assets will be packaged and run separately for value as a standalone business,” Gallagher said.

The company will progress growth opportunities across higher margin conventional assets and maximise production across operated assets and develop focused exploration strategy and capability, and identify additional gas supply to drive long-term value from the five core, long-life natural gas assets.

Gallagher said Santos will target a $1.5bn reduction in net debt to less than $3bn by the end of 2019 through increased operating cash flow and releasing capital through non-core asset and infrastructure sales. A substantial progress, he said, had been made in 2016 on the Santos turnaround.

Shardul Sharma