Santos continues to clean itself up as the South Australian Government ruminates about whether to lift the 15 per cent shareholding cap on the company.
The oil and gas producer revealed yesterday that it has entered into agreements to sell its exploration and production interests in the United States to IPR North America Holdings Corp and IPR Lay Creek, LLC for a collective US$70 million (A$82 million). These agreements are subject to certain conditions.
"In addition to the cash consideration, Santos will receive a 17.5% net profits interest in 3 exploration prospects targeting deep gas structures in the Texas State Waters," Santos said in a statement to the ASX.
"The initial exploratory well for the first of these prospects (the Cougar L Well), is currently drilling, and it is anticipated an exploratory well on each of the other two prospects will be commenced during the next 18 months."
Santos' intention to divest its United States interests was foreshadowed in an ASX release in early December 2006.
The company said the move "reflects the Company's strategic decision to re-focus on its exploration and production activities in Australia, Asia and the Middle East."
Santos said on June 15 that it had lodged its formal submission to the South Australian Government's review of the cap on shareholdings in the company contained in the Santos (Regulation of Shareholdings) Act 1989.
The review was announced on May 1 and in its submission, Santos argued strongly for the 15 per cent cap to be dropped.
It said this was based on:
The original intent of the shareholding cap, introduced 28 years ago, is no longer applicable; the shareholding cap inhibits Santos' future growth; removal of the shareholding cap would not give rise to any significant risks to South Australia's economy, but there is considerable upside.
Santos saidSouth Australia's energy security is now assured by integration into the south-eastern Australian energy network; there would be no adverse implications for regional development; and South Australia will benefit directly if Santos can achieve its full growth potential.
"Santos' Board and management strongly believe that the shareholding cap should be removed as it acts as an impediment to Santos realising its full growth potential. Removal would deliver significant benefits to the company and by extension the South Australian economy," said Santos' Managing Director, Mr John Ellice-Flint in a statement issued with the submission.
The South Australian Government has indicated that it expects to complete its internal review by the end of this month and to be in a position to announce its intentions within two months of finalising the review.
Santos shares closed up 22c at $14.10, still well below its all time high of $14.74. Even though the results of the review are three months away, Santos is in play.
