Santos Acquires Eastern Star Gas

Social, legal and health issues related to air and water toxic pollution in Australia.

Santos Acquires Eastern Star Gas

Postby HVPA_research » Fri Jul 22, 2011 10:35 pm

From: Rosemary Nankivell <>
Subject: Santos Acquires ESG
Date: 18 July 2011 13:37:04 GMT+10:00

Monday, 18 July 2011
Bevis Yeo

SANTOS will acquire Eastern Star Gas in an all-share deal valued at about $A924 million and could end plans to develop a liquefied natural gas project at Newcastle.

ESG shareholders will receive 0.6803 Santos shares for every 10 ESG shares they hold, valuing ESG shares at 90c, a 51% premium over the closing price of 59.5c on July 15.

Speculation had been rife about an impending takeover since Santos had quietly increased its stake in ESG from 19.99% to 20.97%, though Santos said then that it was part of its partnership with ESG to develop Australia’s next major coal seam gas province.

While it is still unclear what a deal would mean for ESG’s plans to develop an LNG project at Newcastle, which had already entered into front-end engineering and design, Santos managing director David Knox had previously said he would prefer to use gas from the Gunnedah Basin for domestic use or piped to Queensland as feedstock for Santos’ Gladstone LNG project.

“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,” Knox said in a statement.

“The acquisition of ESG is a unique opportunity to consolidate our Gunnedah Basin interests and establish the leading position in Australia’s next major natural gas province.”

Santos has already reached a deal to acquire TRUenergy’s 3.8% stake in ESG.

TRUenergy will also acquire a 20% interest in the CSG permits and a pro rata share of other assets previously held by ESG for $284 million.

Knox said the farm-in by TRUenergy would fully cover Santos’ expected increase in capital expenditure to fund its share of developing the Gunnedah Basin permits through to the end of 2014.

ESG chairman John Anderson said the company’s board had unanimously recommended the offer to its shareholders as it offered them greater balance sheet strength and exposure to the wider eastern Australian gas market.

ESG chief executive officer David Casey said: “A combination with Santos provides the Narrabri gas project with more options to realise its world class potential.

“Santos’ proposal recognises Eastern Star Gas’ technical expertise and prime position in the coal seam gas industry.”

ESG shareholders will meet in mid-October to decide on the acquisition, which is expected to close in late October.

Tags: CSG,Santos,EasternStar,takeover,LNG,201107
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