The Santos Ltd (ASX: STO) share price is down slightly today, after news the company finally completed the sale of 25% of its Darwin LNG and BayuUndan projects. The sale has been on the table since March 2020, though it’s been backdated to October 2019.
At the time of writing, the Santos share price is 0.71% to $7.00 per share.
Let’s take a closer look at the energy company’s finalised deal.
Selling stakes in Darwin LNG and BayuUndan
Santos shared this morning that it has finally completed the sale of 25% of Darwin LNG and BayuUndan to global energy provider SK E&S.
SK E&S is also a joint venture partner at Santos’ Barossa project. The company has a 37.5% stake in Barossa, which works to backfill Darwin LNG.
The sell-down has placed US$186 million into Santos’ bank account. That figure represents the sale price of US$390 million minus the cashflows from the 25% interests since October 2019.
In today’s release, Santos also announced the 2 companies have signed a memorandum of understanding to investigate the possibility of extracting carbon-neutral LNG from Barossa. The investigation would include collaboration with Santos’ Moomba CCS project, arrangements for carbon credits and potential for the future development of zero-emissions hydrogen.
At completion of the sell-down, Santos’ interest in BayuUndan and Darwin LNG is 43.4%. Santos is to remain as operator of both assets.
SK E&S is the next largest holder of the projects, with INPEX, Eni, JERA and Tokyo Gas also holding stakes.
Receiving the first gas from Barossa to backfill Darwin LNG is expected to happen the first half of 2025.
Commentary from management
Santos’ managing director and CEO Kevin Gallagher said he was delighted to welcome SK E&S as a partner in BayuUndan and Darwin LNG.
“The sell-down to SK E&S is in-line with our strategy of disciplined growth while maintaining a strong balance sheet by managing equity levels in our growth projects consistent with disciplined capital management,” he said.
Santos share price snapshot
The Santos share price is performing well on the ASX in 2021 so far.
Currently, the Santos share price is up 9% year to date. It’s also up 41% over the last 12 months.
The company has a market capitalisation of around $14 billion, with approximately 2 billion shares outstanding.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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