Key Highlights

• Santos has signed a binding agreement to acquire an additional 3.3% participating interest in Papua LNG from TotalEnergies for approximately US$189 million.

• The Acquisition will increase Santos's total participating interest in Papua LNG to 21% (post State back-in), up from 17.7%.

• ExxonMobil will assume operatorship of Papua LNG from TotalEnergies, alongside its existing PNG LNG operatorship, with the potential for significant operational synergies.

• The transaction is conditional on regulatory approvals and Papua LNG achieving a final investment decision (FID), planned for Q4 2026.

Santos Limited (ASX:STO) announced on 7 September 2026 that it had executed a binding agreement to acquire an additional 3.3 per cent participating interest in the Papua LNG project (post State back-in) from TotalEnergies, conditional on regulatory approvals and the Papua LNG project achieving a final investment decision (FID). The transaction was announced in the context of TotalEnergies' agreement with ExxonMobil to transfer operatorship of Papua LNG to ExxonMobil PNG Antelope Limited, in parallel with a partial sell-down of TotalEnergies' participating interest to other joint venture partners in proportion to their existing holdings.

The consideration payable by Santos under the transaction is approximately US$189 million. The acquisition will be effective from 1 January 2026. Santos described the move as consistent with its stated strategy of disciplined, value-accretive growth centred around existing infrastructure and increasing exposure to Asian LNG demand. The company's Equity LNG production from Papua LNG is expected to increase by approximately 19 per cent as a result of the higher participating interest, rising to approximately 1.2 million tonnes per annum (Mtpa).

Post-Transaction Joint Venture Structure

Following completion of the transaction, Santos's participating interest in Papua LNG will increase from 17.7% to 21.0% (post State back-in). ExxonMobil's interest will rise from 28.7% to 34.1%, while TotalEnergies' stake will decrease from 29.1% to 20.0%. ENEOS Xplora will increase its interest from 2.0% to 2.4%. The Independent State of Papua New Guinea will retain its 22.5% interest, though the State will also hold an option for an additional aggregate 2.5% interest, approximately 0.9% of which would come from Santos, subject to various conditions.

The transition of operatorship to ExxonMobil is described by Santos as a positive development. ExxonMobil already operates PNG LNG, the adjacent project, and Santos anticipates that operating both the Upstream and Midstream project scopes under a single operator will deliver operational synergies and improved project execution outcomes. The alignment of joint venture participants across PNG LNG and Papua LNG through this transaction was highlighted by management as a strategic benefit in its own right.

FID Timing and Capital Allocation Context

The Papua LNG project is on track for a final investment decision in Q4 2026, according to Santos. Completion of Santos's acquisition is also contingent on FID occurring, meaning the transaction and the project's greenlight are closely linked. Santos has indicated it will provide updated cost and schedule information for Papua LNG, including project economics, at the time of FID.

In framing the acquisition within its broader capital allocation framework, Santos pointed to a target free Cash Flow breakeven oil price of $45–50 per barrel. The company noted that as its Barossa gas project and Pikka oil project move into operations, Papua LNG is intended to position Santos for the next phase of value-accretive growth. The company's Managing Director and CEO, Kevin Gallagher, described Papua LNG as a world-class project strategically positioned to Supply premium Asian markets and offering multiple value streams for Santos.

Conclusion

Santos's acquisition of an additional 3.3% interest in Papua LNG from TotalEnergies for approximately US$189 million represents a measured increase in exposure to a world-scale LNG development at a significant pre-FID juncture. The operatorship transition to ExxonMobil, which operates the adjacent PNG LNG project, introduces potential for synergies and consolidated project governance. Investors and analysts following Santos will be focused on the Q4 2026 FID outcome, the updated project Economics to be disclosed at that time, and the ongoing progress of Barossa and Pikka as the company's near-term production growth drivers.