Australian energy giants look for $3bn investment

Santos is seeking to raise the amount, partly to fund its portion of the ExxonMobil-led LNG venture in Papua New Guinea, the largest investment in the Pacific nation.

Shareholders in Santos are  being offered two shares for every five they own at $12.50 apiece, a discount of 27% on the last traded price of $17.09.

The offer has two components:

• an underwritten offer to institutions which will raise a minimum of $1.7bn; and

• an offer to retail investors which is not underwritten but could raise up to $1.4bn.

Santos said it would use $1.1bn of the proceeds to fund its share of the capital expenditure of the PNG LNG project, which is expected to have capital costs of $12.5bn.

The company said that the LNG venture had recently signed its first non-binding sales agreement with a “major Asian customer” for the purchase of 2m tonnes annually, boosting confidence that the project would reach final investment decision before the end of the year.

The Papua New Guinea LNG project is expected to have capacity to export 6.3m tonnes a year.

Santos said a portion of the share offer proceeds would also fund other projects, which include a proposed LNG venture at Gladstone in Queensland with Malaysia’s Petronas.

Meanwhile, LNG Ltd, in which John Fredriksen’s Golar LNG is the largest shareholder with a 15.4% stake, has  requested a halt in the trading of its shares on the Australian Securities Exchange while it completes a placement of shares which is 11.4% of the company’s issued securities.

LNG Ltd has a market capitalisation of $104m.