Brookfield, Macquarie to exit Australia's Quadrant Energy for $2.2b

Santos will fund the acquisition through its existing cash reserves as well as a $1.2 billion debt facility, the company said in a statement. Additional contingent payments related to the recently discovered Dorado oil fields and royalties from future revenues of Quadrant’s Bedout Basin project may follow.

Quadrant was formed after a consortium led by Macquarie and Brookfield acquired the Australia business of US-based oil and gas exploration and production company Apache in 2015 for $2.1 billion including debt. Currently Brookfield holds a 36% stake in Quadrant and Macquarie holds 22%. Additional investors include Wesfarmers and AMB Holdings, which own 13% each, and Caisse de dépôt et placement du Québec (CDPQ), which holds 12%. The remainder is owned by Quadrant’s management.

The company holds natural gas and oil production, development, and exploration assets across more than 52,000 square kilometers, from which its share of production in 2017 was 19 million barrels of oil equivalent (mmboe). These assets include two projects in which Santos holds a 45% stake, with Quadrant holding the remainder. Bringing these projects under Santos’ direct management is expected to help the company realize synergies of up to $50 million per year.

Santos was established in 1954 and concentrates on the exploration and production of upstream natural gas resources. According to the company’s most recent annual report it had 848 mmboe in proved and probable reserves as of December 2017 across projects in Australia and Papua New Guinea. Revenue for the previous 12 months came to $3.1 billion, up from $2.6 billion the year before, while profit grew from $63 million to $336 million.

Earlier this year Santos rejected a buyout bid from EIG Global Energy Partners, backed by China-based private equity firm Hony Capital and gas distributor ENN Group, that would have valued the company at up to $10.9 billion. The company said the bid was highly leveraged and would have required Santos to provide support for EIG’s debt and to hedge a significant portion of its oil production.

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• Topics
• Australasia
• Infrastructure
• Industrials
• Trade sale
• Australia
• Brookfield Asset Management
• Macquarie Group
• Caisse de depot et placement du Quebec (CDPQ)
• Commodities
• Exit