Bullish LNG Export Outlook, page-15

Here is an extract of a recent article in 'The Australian' discussing the possibility that Santos may be interested in undertaking a Takeover itself. Would make sense if this was the case as SP often falls for the suitor in a Takeover. Anyway here are the main extracts from the article I have referenced above :

"Santos may be driving down debt and paying dividends again, but there’s also excitement that the $13 billion Adelaide company could be about to launch a takeover of its smaller rival Comet Ridge.

Comet Ridge, which is listed with a $226m market value, is the joint venture partner of Santos and APLNG on Mahalo in Queensland, a coal-bed methane gas asset that is on track for production in about three years’ time. Shares in Comet Ridge closed up 1c at 34.5c yesterday.

The speculation comes after Santos itself recently found itself in the crosshairs of suitor Harbour Energy. The Santos board rebuffed the $14bn offer.

Quadrant Energy has been in the sights of the group for at least a year.
However, one of the owners of the business, Macquarie Group, is believed to be eager to retain the West Australian concern until a project comes on stream in about two years’ time, boosting cashflow and making the operation more attractive to buyers.

The speculation is that Santos remains in talks to buy out Comet Ridge and APLNG on Mahalo, but perhaps the group sees a better plan to swallow the company as a whole, given that the project comprises most of its value. Analysts at the Royal Bank of Canada have a 50c price target on the Comet Ridge stock and a current 48c valuation.

They estimate that 41c, or 85 per cent, of Comet Ridge’s value relates to its 40 per cent interest in Mahalo. Santos and APLNG retain 30 per cent each.

Santos declined to comment on the speculation, while a source close to the company said there was no “active” work happening on an acquisition of Comet Ridge.
But market analysts widely believe an acquisition of Comet Ridge or Mahalo makes sense as the company moves to boost its position in the market.

Additional gas supply from Mahalo could be used to feed into the domestic market and Santos could embark on swaps with other parties to then feed its Gladstone LNG project, which provides gas for exports.

Mahalo is currently undergoing appraisal testing and drilling, and an investment decision could be made next year with first gas produced in 2021.
The other talking point with respect to Santos is that it is also looking at lifting its stake in the PNG LNG project, of which it owns 13.5 per cent. Other owners include operator ExxonMobil with a 33.2 per cent interest, Oil Search with 29 per cent, the PNG government with 16.8 per cent, and Nippon and Mineral Resources Development Company, which owns the remainder.

There has been discussion about how to expand the LNG production trains, and Santos has a right over other parties to lift its interest in the project because it can bring either financial support or gas support to the transaction."


GLTH