(Source: Datamonitor)
Santos has acquired Gastar Exploration's 35% interest in various Gunnedah Basin exploration permits and production areas operated by Eastern Star Gas for A$300 million. The company has also acquired a 19.99% interest in local coal seam gas company Eastern Star Gas from Hillgrove Resources for A$176 million.
Santos and Eastern Star Gas's (ESG's) combination of operated coal seam gas (CSG) permits in the Gunnedah Basin in New South Wales, Australia will cover a total area of around 63,000sqkm. The resource potential of this area is estimated to exceed 50 trillion cubic feet.
The consideration being paid to Gastar equates to A$0.66 per gigajoule (GJ) of current 3P reserves. Santos will pay a further A$20 million to Gastar if ESG meets certain reserve targets by December 31, 2009.
Santos's acquisition of a 19.99% interest in ESG represents a strategic investment that will align the interests of the respective joint venture partners. Santos will pay A$176 million for the interest, equating to a price of A$1.00 per ESG share.
Santos has agreed to make an additional payment to Hillgrove in the event that any party completes the acquisition of a beneficial interest of more than 50% in ESG at a price in excess of A$1 per share within 18 months.
David Knox, CEO of Santos, said: "This is a significant step in our Gunnedah Basin strategy. Combining the proven CSG expertise of Santos and Eastern Star with the ability of Santos to deliver major projects and develop various channels to market will advance the region's potential as Australia's next major CSG province, bringing jobs and investment to the area."
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