Pens down on Santos sales as equity option explored
Santos' board met last week to consider offers received as part of its strategic review. Dean Sewell
Santos is understood to have stopped work on potential asset sales as the company and its advisers explore equity options to shore-up its balance sheet.
Street Talk understands Santos, which is advised by Deutsche Bank and Lazard, has turned its attention to Asia as it seeks a white knight cornerstone investor
as flagged by Street Talk on Tuesday.
Sources said China Petroleum & Chemical Corporation, known as Sinopec, could fit the bill, while any strategic placement would likely be capped at 15 per cent of the company's issued equity and its investment would be accompanied by a rights issue to existing shareholders.
Securing a white knight backer could also effectively block any move by Santos' suitor, Middle East-backed Scepter Partners, which lobbed a $7.14 billion indicative bid a fortnight ago.
The hard part for Santos would be pricing the deal, given turbulence in the underlying stock and the oil price, and Scepter's $6.88 a share indicative offer. It may seem odd for Santos to offer new shares at $5 to $5.50 each, while also saying no to a $6.88 a share bid.
Santos shares closed at $6.21 on Tuesday, up 4.4 per cent.
The decision to stop working on asset sales comes after Santos had sought bids for all or part of its portfolio, including its Western Australian assets, its stake in the PNG LNG project and its gas assets off the coast of Victoria.
As Street Talk has previously reported, Santos had been seeking bids for assets of the company as a whole by October 20 before extending the deadline by one week. [
Santos did strike a deal to sell its stake in the Stag oil field in Western Australia, however that process was outside of the wider strategic review].
Santos' board, headed by executive chairman and owner of the strategic review Peter Coates, met to review the offers last week.
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