13.6% PNG LNG for ~ $1 B

[Tree]

Santos looks to sell off PNG LNG stake

 

The Australian energy company Santos is reportedly looking to sell off its stake in Papua New Guinea's major liquefied natural gas project.Santos has a 13.6 percent stake in the $US19 billion LNG project led by ExxonMobil.
But with reports that with the company facing internal spending restraints, talks are proceeding with potential Japanese suitors for the PNG LNG stake.
The Business Spectator reports the deal could net Santos about $US1 billion.
Japan's Marubeni has been mentioned in connection to a sale of Santos' stake, while Mitsubishi, Mitsui and Osaka Gas are also seen as logical buyers.

[CAC]

[quote='Tree' pid='66389' dateline='1454411206']

Santos looks to sell off PNG LNG stake

 

The Australian energy company Santos is reportedly looking to sell off its stake in Papua New Guinea's major liquefied natural gas project.Santos has a 13.6 percent stake in the $US19 billion LNG project led by ExxonMobil.
But with reports that with the company facing internal spending restraints, talks are proceeding with potential Japanese suitors for the PNG LNG stake.
The Business Spectator reports the deal could net Santos about $US1 billion.
Japan's Marubeni has been mentioned in connection to a sale of Santos' stake, while Mitsubishi, Mitsui and Osaka Gas are also seen as logical buyers.

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Hession says our stake in the new plant might be worth 9B.  I'm trying to reconcile that with this possible Santos transaction for a portion of a similar plant.  1B for 13% would extrapolate to about 8B for the entire plant.  Maybe Santos is taking a haircut off "full value" because of their minority interest...but IOC will also have a minority interest.  Maybe TOT learns from XOM and builds the plant in a more cost-effective manner which increases returns, and thus value.  That is, of course, optimistic speculation at this point, but let's give them the benefit of the doubt and say it adds 25% more value to our plant than XOM's plant.  That puts the new plant at 10B instead of 8B. IOC's 40% stake (plus or minus) would then be worth 4B.  There are obviously some variables not accounted for in this crude analysis but 4B is less than half of Hession's number. 

[Spartina]

Point taken Tree, those numbers may change between now and 2021 though.

[Stavros]

It's $1 billion of equity plus assumption of debt which is another $ 2.3 billion.

[CAC]

Stavros -- It's $1 billion of equity plus assumption of debt which is another $ 2.3 billion.

*****

Thanks, Stavros.  That is helpful...and encouraging.

[Stavros]

My error .... Their Debt is most likely about $1.8 Billion rather than the $2.3 Billion I threw out.

So $2.80 Billion/0.136 = $20.6 Billion is Santos' position on the PNG LNG enterprise value.