Santos Buys Coal Seam Developer Eastern Star

Santos Ltd has agreed to buy coal seam gas focused Eastern Star Gas Ltd, in an all-share deal valued at A$868 million ($920 million).

The acquisition of Eastern Star builds on Santos’ existing interests in the Gunnedah Basin and increases Santos' gas reserves for its LNG export ambitions.  Following completion, Santos will have the largest natural gas reserves position in NSW, with 1,216 PJ of 2P reserves and 2,238 PJ of 3P reserves.

The transaction also includes the subsequent sale of a 20% working level interest in Eastern Star permits in the Gunnedah Basin, northern New South Wales, for A$284 million to TRUenergy Holdings Pty Ltd, a leading energy retailer with significant power generation interests in Eastern Australia. Santos will assume operatorship and own 80% of Eastern Star's coal seam gas (CSG) permits with TRUenergy, the Australian arm of Hong Kong's CLP Holdings, owning the remaining 20%.

Santos Chief Executive, David Knox, said: “This transaction represents the next major step in Santos’ eastern Australia gas strategy and positions the company to meet the expected increase in demand for natural gas from both domestic power generation and export LNG markets.”

“Santos has been working in regional Australia for more than 50 years, including 15 years exploring for and developing coal seam gas.”

“Santos is committed to developing the coal seam gas industry in the Gunnedah Basin without impacting the important role the region plays as an agricultural producer.  The growth of the natural gas industry in the Gunnedah Basin will bring new jobs and additional investment to local communities across the region,” Mr. Knox said.

Source: Santos Ltd.