Santos has executed a conditional sale and purchase agreement to divest its 42.86% operated interest in the Mahalo Joint Venture in Queensland’s Bowen Basin to Comet Ridge Limited. The transaction delivers A$40 million in upfront consideration, with up to A$20 million in additional contingent payments tied to future production milestones.

Separately, Santos has completed the sale of its 42.71% interest in the Petrel fields and its 100% interest in the Tern fields in the offshore Bonaparte Basin to Eni Australia. While financial details were not fully disclosed, the company said the deal delivered both cash and contingent consideration and significantly reduced its future decommissioning exposure.

The divestments reflect Santos’ ongoing portfolio rationalisation strategy, which has increasingly prioritised near-term, capital-efficient projects over longer-dated or pre-development assets. Managing Director and CEO Kevin Gallagher said the transactions demonstrate capital discipline by monetising assets that are not immediate priorities within the company’s capital allocation framework.

Mahalo is a coal seam gas development in eastern Australia that has been viewed as a potential contributor to domestic gas supply but remains at a pre-development stage. By transferring operatorship and ownership to Comet Ridge, Santos enables its partner to advance the project while retaining exposure only through contingent payments linked to production success.

The Bonaparte Basin sale further aligns with a broader industry trend among Australian upstream producers to reduce long-term abandonment liabilities, particularly for offshore gas fields approaching maturity. Decommissioning costs have become a growing concern across the sector, influencing asset sales and joint venture restructurings.

Santos’ strategic focus remains on delivering its flagship Barossa gas project offshore northern Australia and the Pikka oil development in Alaska, while progressing the next phase of growth opportunities that leverage its existing operating footprint. The company has repeatedly signaled that capital discipline and shareholder returns will guide future investment decisions.

From a market perspective, the transactions underline the continued reshaping of Australia’s gas sector, as smaller and mid-cap players acquire assets divested by majors seeking to streamline portfolios, manage balance sheet risk, and concentrate on fewer, higher-impact developments.

By Charles Kennedy

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