bp,eni,shell eye santos, page-10

13th; this story is just out from petroleumnews.net today
thought you may be interested:
Santos caught in the crosshairs?

Bevis Yeo
Wednesday, 25 March 2009

RUMOURS of an impending takeover continue to swirl around Santos, with old favourites BP and Shell named as likely candidates.



An artists' impression of cargo loading at Gladstone LNG

Reports from Reuters and the Australian Financial Review yesterday named Shell as a possible bidder for Australia’s third-largest oil and gas company with the AFR suggesting that Shell might team up with AGL Energy to launch a joint bid before dividing the assets up between them.

Reuters added BP and Eni to the mix, while an industry source told PetroleumNews.net that besides BP and Shell, BG might also be feeling that it could stomach more after digesting Queensland Gas Company and Pure Energy.

The source did note that while BP was looking for new liquefied natural gas projects or assets, and was considering coal seam gas as an option, the British supermajor could be looking at its options in China and India rather than in Australia.

The speculation comes as little surprise to PetroleumNews.net starting as it did after Santos’s government-imposed 15% shareholder cap was lifted on November 29 last year.

Most of the talk then had revolved around China National Petroleum Corporation, though Santos was quick to say that as far as it knew the reports were pure speculation.

Reuters noted in its latest report that with the close scrutiny over the number of Chinese investments in Australia, it was unlikely that a Chinese bid would be forthcoming.

Santos’s large reserves base and liquefied natural gas projects coupled with the lower Australian dollar make it an attractive buy to any potential predators.

And, it is not impossible for any potential bidders to find partners interested in the Santos assets that do not fit well into their strategy. Cue the various alliances with AGL speculation pieces.

Of the possible bidders mentioned so far, Shell has already made its move in the coal seam gas-to-LNG sector with its farm-in to Arrow Energy’s CSG assets in Australia and overseas.

Some see Shell’s decision to sell its stake in Pure Energy to BG rather than joining the fray as a sign the Anglo-Dutch company is eyeing other targets.

BP, on the other hand, is believed to be keen to bulk up its LNG portfolio with Bloomberg quoting BP exploration and production head Andy Inglis as saying that the company was looking at new opportunities and different sources of gas to expand its LNG production.

With Santos’s Gladstone LNG project with Petronas, its stake in the ExxonMobil-led PNG LNG venture in Papua New Guinea and its interest in the producing Bayu Undan LNG project, Santos no doubt appears to be the perfect candidate for BP’s ambitions.

The latter two stakes are also believed to be the motivation for Italian major Eni’s interest.

Eni has said previously it is keen to expand into Papua New Guinea and it also holds a stake in Bayu Undan.

However, Santos will not be an easy target for any takeover bids.

The company is sitting on a strong cash balance – thanks, in no small part, to its deal with Petronas – and it recently reported a 42% increase in its 2008 underlying profit to $A571.6 million.

Shares in Santos have also defied pressure from the global financial crisis, making it likely that any bidders would have to be prepared to pay a premium, especially if a bidding war breaks out.