Australian regulators have approved Santos’ proposed acquisition of its compatriot oil company Quadrant Energy.
Under the proposed transaction announced in August, Santos will buy 100% of Quadrant Energy $2.15 billion plus, potential contingent payments, related to resources from recently struck Dorado offshore oil find.
The Australian Competition and Consumer Commission (ACCC) said that it had found after detailed investigation that it is unlikely that the proposed acquisition will result in a substantial lessening of competition in the supply of gas to domestic customers in Western Australia.
“The ACCC considers that a combined Santos/Quadrant will continue to face strong competition from a range of suppliers, including large LNG producers such as Chevron and Woodside,” ACCC Chair Rod Sims said.
“Most market participants believe the Western Australian domestic gas market is currently oversupplied. While the demand-supply balance could tighten in future, the ACCC considers that the proposed acquisition will not have a significant impact on future gas prices.”
“In Western Australia, gas exporters are required to reserve 15 percent of their gas for the domestic market, so this should ensure that gas available for domestic customers continues to grow, and from a range of players,” Sims said.
In addition, the ACCC approached the relevant WA government departments and no concerns were expressed about the proposed acquisition.
Completion within weeks
Santos on Thursday said that the condition precedent for completion of the acquisition of Quadrant had been satisfied with the Australian Competition and Consumer Commission (ACCC) decision not to oppose the acquisition. Completion is expected to occur within weeks.
Quadrant Energy holds natural gas and oil production, near and medium-term development, appraisal and exploration assets across more than 52,000 km2 of acreage, mainly in the Carnarvon Basin offshore WA, Australia’s largest offshore oil and natural gas province.
The company has recently struck what is believed to be W. Australia’s largest oil discovery in years at its Dorado-1 well.
Quadrant’s share of production from the assets in 2017 was 19 million barrels of oil equivalent (mmboe).
According to Santos, Quadrant 2P reserves at the end of 2017 were 220 mmboe (~75% developed).
Quadrant’s conventional natural gas assets include significant portfolio overlap with Santos, providing an opportunity to realize material combination synergies estimated at US$30-50 million per year, Santos said in August.
Commenting on Thursday, Santos Managing Director and Chief Executive Officer Kevin Gallagher said the Quadrant acquisition delivers increased ownership and operatorship of a high quality portfolio of low cost, long life conventional Western Australian natural gas assets which are well known to Santos.
“It is materially value accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier.”
“We already have very significant growth projects across our five core assets, and Quadrant’s recent oil discovery at Dorado is another exciting opportunity for us,” Gallagher said.
Offshore Energy Today Staff