Terms of the deal were not released, but analysts suggest the price was around $50 million (Aus.). The purchase includes Santos’ interest in the field as well as in the 270-km oil pipeline that runs east from Mereenie to Alice Springs.
The other 50% interest holder in Mereenie is Brisbane-based Central Petroleum Ltd., which bought its share from Santos for $45 million in June 2015. Central is the field operator.
Macquarie holds 2.3% shareholding in Central Petroleum and it launched an unsolicited $75 million (Aus.) takeover for the whole company last month. Central rejected the 17.5¢/share overture saying it was deemed by the board not to be in the shareholders’ best interests.
There is now speculation that Macquarie will return with a higher bid.
Macquarie is the main financial lender to Central and would therefore know the full details of Mereenie field.
There are plans for a new $800-million gas pipeline to connect the Northern Territory gas grid to Queensland scheduled for completion in mid-2018. The line, dubbed the North East Gas Interconnector, is being built by Jemena between Tennant Creek and Mount Isa. When this is done Mereenie gas could become a significant gas supplier to Australia’s eastern states markets.
For Santos, the deal with Macquarie is part of its strategy to simplify its portfolio and exit noncore assets.
Mereenie field was discovered in the 1960s and brought on stream in 1984. It produces oil and condensate that is piped to Alice Springs and then trucked south to the Port Bonython facilities on the northern shores of Spencer Gulf in South Australia for storage and export.
Gas produced with the oil is sold into the Northern Territory grid or reinjected into the field for pressure maintenance of the reservoir.