Australian gas developer, Santos has signed a binding sale agreement to sell a 2.6% participating interest in PNG LNG to Kumul Petroleum Holdings (Kumul).
The price was confirmed as $576 mill in cash and the assumption of around $160 mill of project finance debt.
Both companies said that the completion of the sale agreement is not subject to finance and is conditional only on the approval of the PNG competition regulator on or before 31st December, 2023.
Kumul has paid $80 mill into escrow with Santos as a part payment and has also undertaken to make further pre-payments of into escrow until the sale’s completion.
In addition, Santos has agreed to grant Kumul a call option to acquire a further 2.4% participating interest in PNG LNG for a cash purchase price of $524 mill, plus a proportionate share of project finance debt.
The call option must be exercised on or before 30th June, 2024 and is subject to completion of the sale agreement and the satisfaction of customary conditions, including necessary regulatory approvals and third-party consents.
On 27th September, 2022 Santos announced the receipt of a binding conditional offer from Kumul to acquire a 5% interest in PNG LNG, which has now expired.
Santos Managing Director and CEO, Kevin Gallagher, said: “I am pleased we’ve reached a binding agreement with Kumul on the sale of up to 5% of PNG LNG.
“This re-structured transaction is a pragmatic solution that provides a clear pathway to completion and builds our strategic alignment with Kumul and our long friendship with PNG, where Santos has been a committed corporate citizen for over 40 years.
“PNG LNG is a low-cost and low emissions intensity asset that contributes strong cash flows to the project participants and economic and social benefits to the nation,” he said.
PNG Prime Minister, James Marape, added. “This transaction will increase Kumul’s interest in PNG LNG and supports the PNG government objectives for the people of PNG to have a greater equity interest in the development of their natural resources.”
