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Santos puts itself on the block, stock falls to 12-year low
[MELBOURNE] Australia's Santos Ltd put itself up for sale on Friday after receiving approaches and moved to replace its embattled chief executive, just as its flagship US$18.5 billion Gladstone liquefied natural gas project is set to start up.
Santos appointed Peter Coates as executive chairman following a one-third slide in its share price this year, and said it was looking for a successor for Managing Director David Knox.
Mr Coates will lead a strategic review, with Deutsche Bank and Lazard advising, as Santos has received approaches from parties interested in some of its assets and "strategic initiatives" and is hoping for more interest after Friday's announcement.
Santos' shares, however, slid 7 per cent in early trade to a 12-year low of A$5.20. "No options will be ruled out from consideration," MR Coates said in a statement. "The Board is determined to address the impact of the fall in global oil prices on the company's share price relative to other oil and gas companies." A spokesman declined to comment on any of the approaches.
Santos has been under pressure to shore up its balance sheet since oil prices started sliding in June last year and has focused on cutting capital and operating costs rather than sell new shares to boost its funding.
It had been counting on production from its share of the Papua New Guinea LNG project, which began exporting last year, and Gladstone LNG starting around late September to boost its coffers, but weak oil-linked LNG prices have hammered earnings.
On Friday it reported a worse-than-expected 88 per cent slide in underlying net profit for the six months to June to A$32 million (US$23 million), hit by the oil price slide and a rise in exploration spending. The result was just over half of what four analysts on average had expected, at around A$58 million.
It cut its interim dividend by a quarter to 15 cents a share.
Gladstone LNG is one of the world's first three coal seam gas-to-LNG projects, all located in Australia's Queensland state, all starting up just as oil prices have sunk to 6-1/2 year lows.