Oil and gas group Santos has taken advantage of the wave of cash floating around the energy sector to refinance its debt to the point where it won’t have a loan maturing for the next five years.
The move gives Santos certainty for expansion moves it plans, such as the new oil project in Alaska and possibly a major domestic project in Australia. Monday greenlighted the $US311 million duplication of the Darwin – Barossa pipeline in the Timor Sea.
The decision will extend the Barossa export gas pipeline to the Santos-operated Darwin LNG facility and allow for the repurposing of the existing Bayu-Undan to Darwin pipeline to facilitate carbon capture and storage (CCS) options.
Tuesday saw Santos announce that it had reached agreement to amend and extend its two syndicated bank loan facilities totalling $US1.25 billion.
“The facilities comprise a US$250 million fully-revolving loan maturing in August 2025 and a US$1 billion fully-revolving loan maturing in February 2028. The loans bear a floating interest rate over the Secured Overnight Funding Rate (SOFR) with a margin that references Santos’ external credit rating, currently 1.3 per cent per annum for the 3-year facility and 1.5 per cent per annum for the 5.5-year facility,” Santos explained
“The facilities received strong support from Santos’ existing syndicated banking relationships and proceeds will be used initially to refinance existing drawn bank loans maturing in 2024 and 2026, and thereafter for general corporate purposes.
Santos said that following refinancing of the existing facilities, Santos will have no significant debt maturities until 2027, excluding PNG LNG project finance which is serviced directly from cash flows from that project.
Santos Chief Financial Officer Anthea McKinnell said the syndicated facilities were consistent with the company’s strategy of securing flexible and competitively priced funding.
“This is an excellent result for Santos, showing strong support from our bank lenders and demonstrates our ability to access bank debt at competitive terms,” Ms McKinnell said.
“The facilities are fully-revolving, which provides significant flexibility and lower borrowing costs when not drawn.
“With these facilities in place, we now have no significant corporate debt maturities until 2027.
The refinancing shows banks have no worries (at the moment) dealing with carbon emitting energy companies.
