Santos has also, this morning, unveiled the results of its strategic review and announced a total package of $3.5 billion (Aus.) in capital initiatives designed to reduce its debt by a third to a more manageable $6.2 billion.
The company had previously cut capital expenditure by $900 million and saved $370 million/year by shedding 770 jobs throughout its business divisions.
Before serving as CEO of Clough, Gallagher worked as a senior executive for Woodside Petroleum Ltd. on the company’s North West Shelf venture. Before that, Gallagher was a drilling engineer with Mobil in the North Sea. He will begin with Santos early in 2016.
Santos’ new capital initiatives in the $3.5-billion package include a $2.5-billion fully underwritten entitlement issue, a $500-million placement with private Chinese equity firm Hony Capital, and the sale of its 35% interest in Kipper gas field in Bass Strait to Japan’s Mitsui for $520 million.
The placement means that Hony will increase its interest in Santos to 7.9% from 1.4% by paying $500 million for 73.5 million shares at a 15% premium to the last closing price of $5.91/share. Hony has agreed not to increase its interest in Santos above 9.9% for 3 months without Santos’s approval and will have its shares locked up to 12 months.
Kipper development is a subsea tie-back to existing ExxonMobil Corp.-BHP Billiton facilities in Bass Strait and has been constructed as part of the Turrum-Tuna project.
The moves will see reduce debt and leave the company with cash and undrawn facilities of about $5.5 billion.
Santos Chairman Peter Coates underlined the point that the capital initiatives mean that Santos is under no pressure to sell more assets. Nevertheless the company will continue to look at any “inbound” offers that come along.
Santos last week agreed to sell its interest in Stag field off Western Australia to Malaysia’s Sona Petroleum Bhd. (OGJ Online, Nov. 2, 2015).