MELBOURNE, Australia--Private-equity backed oil and gas investor...

MELBOURNE, Australia--Private-equity backed oil and gas investor Harbour Energy Ltd. continues to edge toward a takeover deal for Santos Ltd. (STO.AU), negotiating for the support of Chinese investors that collectively hold the single biggest stake in the Australian company. In a statement to the Australian Securities Exchange on Tuesday, Harbour said it was working in concert with Chinese natural-gas distributor ENN Group Co. and private-equity firm Hony Capital and is seeking to agree on terms with the pair in order to put forward a final proposal to acquire Santos. Last year, ENN and Hony Capital raised their collective stake in Santos to 15.1% and agreed to act together as investors. Santos, which has a market value of almost US$9.8 billion, is one of the largest independent oil and gas producers in the Asia-Pacific region, supplying homes and businesses. It owns vast oil and gas acreage in Australia and is a partner in two liquefied natural gas ventures in Australia and another in Papua New Guinea. In early April, Santos agreed to open its books after Harbour approached it with a fresh US$10.37 billion takeover bid. However, analysts have speculated the offer would have to be raised to reflect the rise in oil prices since the conditional offer of US$4.98 a share was made. Santos has also continued to sell assets, including a portfolio of investments in Asia, as it chips away at debt that stood at US$2.5 billion at the end of March. Its shares ended Tuesday at 6.23 Australian dollars (US$4.69). Harbour, which was set up by EIG Global Energy Partners in 2014 to hunt for oil and gas assets outside the U.S., last year paid US$3 billion to buy energy assets offshore from the U.K. from Royal Dutch Shell PLC. In April, Harbour said it had lined up equity for a Santos takeover bid from investors including commodities trader Mercuria and $7.75 billion in debt through J.P. Morgan and Morgan Stanley. The tentative offer comprised cash and a special dividend, though it said it would also offer an option for Santos shareholders to accept unlisted shares in a new private company. Harbour has plans to use Santos's core assets to grow in Australia and throughout Asia. Write to Robb M. Stewart at [email protected] (END) Dow Jones Newswires May 15, 2018 03:57 ET (07:57 GMT) Copyright (c) 2018 Dow Jones & Company, Inc.