On November 11, 2016, Santos Limited (ASX: STO) informed that the group is up to date on the market speculation about acquisition of 40 million shares at a price of $3.98 by the Chinese private equity firm, Hony Capital, after market close on November 10, 2016. Said number of shares represent 2.25 percent of the group’s issued capital. The group has enquired Hony Capital about the same, and the latter has confirmed about the successful acquisition of an additional 40 million shares in Santos for $159 million. As a result, Hony Capital’s interest in the group has now increased to about 3.2 percent. Further, it has been informed that the acquisition price is indicative of a premium of about 11 percent to STO’s closing price of $3.58 of November 10, 2016. Last year, STO had made a $500 million private placement to Hony Capital under its strategy of raising capital and it is also worth noting that Hony Capital had sold 11.7 percent stake in STO to the Chinese gas distribution company, ENN group, earlier this year.
STO had lately taken a move to exit from offshore Victoria at the back of announcement of the sale of its Victorian assets to Cooper Energy for a cash consideration of up to $82 million. The group’s share of production from the assets was 5.2 petajoules of sales gas in the first half of 2016. These assets include 50% interest in the Casino-Henry gas project, 50% interest in the Sole gas field and the Orbost gas plant, 10% interest in the Minerva gas field and gas plant, and 100% interest in the Patricia-Baleen gas field. STO’s third quarter 2016 sales volumes were also up 31% to 21.3 mmboe while LNG sales volumes more than doubled to 755,500 tonnes. Another key highlight has been the 53% decline in year-to-date capital expenditure to US$438 million and 2016 guidance has also been reduced to US$700 million from US$750 million.
2016 Guidance (Source: Company Reports)
The stock has surged 6.4 percent which was otherwise noted to see a dip of 5.5 percent in last one month (as at November 10, 2016) at the back of market volatility.
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