Australia’s competition regulator has given the greenlight to the $3 billion integration of two oil and gas companies.
The Australian Competition and Consumer Commission (ACCC) will not oppose Santos’ proposed acquisition of Quadrant Energy.
In August, Santos announced its plans to acquire 100 per cent of Quadrant Energy at a price of $2.92 billion as part of the company’s aim of becoming Australia’s leading domestic natural gas supplier.
We have just advised the @ASX that the @acccgovau has decided not to oppose our US$2.15bn acquisition of Quadrant Energy in WA. Completion is now expected within weeks https://t.co/kEw9vgpGUx #ausbiz #naturalgas pic.twitter.com/fo54JLW8OM
— Santos (@SantosLtd) November 15, 2018
The move increases Santos’ 2P reserves by 26 per cent, up to 220 MMboe, and would raise its annual production by 32 per cent, or 19 MMboe.
In addition to Quadrant’s gas developments, Santos would also take hold of the company’s assets on the northwest shelf of Western Australia where the company recently made a significant oil discovery in the Dorado-1 well.
After a detailed investigation, which included consultations with WA government departments and market participants, ACCC found it is unlikely the proposed acquisition will result in a substantial lessening of competition in the supply of gas to domestic customers in WA.
“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,” said ACCC Chair Rod Sims.
“Most market participants believe the WA 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 WA, gas exporters are required to reserve 15 per cent 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.”
In response to the decision, Santos Managing Director and CEO Kevin Gallagher said the Quadrant acquisition delivers increased ownership and operatorship of a high quality portfolio of low cost, long life conventional WA 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,” he said.
“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.”
According to Santos, completion of the acquisition is expected to occur within weeks.
For more information visit the Santos website.
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