Is Santos (ASX:STO) about to enjoy a $3 billion payday?

Santos might be eyeing a notable asset sale.
The post Is Santos (ASX:STO) about to enjoy a $3 billion payday? appeared first on The Motley Fool Australia. –

Owners of Santos Ltd (ASX: STO) shares might want to keep an eye on the company’s Papua New Guinea assets amid rumours of a sell down.

One top broker flagged that the potential sale could bring a $3.25 billion payday for the oil and gas producer, while moving to sell its Alaskan interests could bring another $1.42 billion.

At the time of writing, the Santos share price is $6.99, 0.36% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.43% this morning.

Let’s take a closer look at the sale Santos is reportedly gearing up for.

Santos may be eyeing asset sales

According to reporting by The Australian, Santos is actively moving to sell down its stake in PNG LNG – boosted by its takeover of Oil Search.

The merged group owns 42.5% of the LNG project after Oil Search’s 29% stake was added to Santos’ 13.5% holding.

Previously, the now-joined companies flagged that the merger would grant the resulting entity the flexibility to sell down some of its stake.

Now, Santos managing director and CEO Kevin Gallagher is reportedly pushing for a fast sale to Total – the operator of the Papua LNG project.

Santos and Oil Search flagged that the sell-down of PNG LNG would realign its interests across PNG LNG, P’nyang, and the Papua LNG project, improving coordination and accelerating the development of Papua LNG.

Total has no interest in PNG LNG or P’nyang.

The Australian reports that Total would be willing to buy as much of the project as Santos is willing to sell, with at least 10% needing to change hands to transfer voting rights.

Morgan Stanley has reportedly stated a 10% stake in the project could bring Santos as much as $3.25 billion if sold at a 25% discount on its valuation.

Additionally, Santos might be eyeing the sale of its stake in the Pikka Project – located in Alaska. The broker reportedly believes that the asset could bring a $1.42 billion payday.

How has Santos been performing on the ASX?

While the ASX 200 has been suffering this year, the Santos share price has been performing relatively well.

It has gained 10% since the final close of 2021. Meanwhile, the ASX 200 has slipped 7%.

The post Is Santos (ASX:STO) about to enjoy a $3 billion payday? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Santos right now?

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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