Santos said it will acquire ConocoPhillips’ interests in northern Australia.
The deal is valued at US$1.465 billion, comprising a US$1.39 billion upfront payment at completion and a US$75 million contingent payment once a final investment decision on Barossa is made.
ConocoPhillips in northern Australia has operating interests in Darwin LNG, Bayu-Undan, Barossa and Poseidon.
The acquisition will have an effective date of 1 January 2019. Completion is subject to third-party consents and regulatory approvals.
Santos managing director and CEO, Kevin Gallagher, said: “We look forward to welcoming ConocoPhillips’ Australia-West employees to Santos and combining the two businesses to create one high performing team with a wide range of exciting career opportunities across Santos.”
ConocoPhillips will continue to support the FID process for Barossa.
The Barossa project is the lead candidate to backfill Darwin LNG and continues to make progress towards a final investment decision early next year. Barossa is intended to be developed using subsea wells tied back to an FPSO for gas processing and condensate export. A 260-kilometre gas export pipeline will transport gas to the existing Bayu-Undan pipeline for onwards transport to Darwin LNG.
Recent project milestones include the award of the subsea production system contract, the award of the gas export pipeline contract and entering into exclusive negotiations with Darwin LNG for the supply of backfill gas. Evaluation of tenders for the FPSO, subsea umbilicals and flowlines and drilling rig packages are progressing well.
Santos currently expects a final investment decision on Barossa by early 2020, with first LNG expected in 2024. Barossa development capex is currently expected to be approximately US$4.7 billion (2019 real) to first gas.
Barossa is expected to extend the operating life of Darwin LNG by more than 20 years. Life extension capex at Darwin LNG of approximately US$600 million (2019 real) is expected to be incurred between Bayu-Undan end of field life and the start of production at Barossa.