ACCC clears way for Quadrant Energy acquisition

The Australian Competition & Consumer Commission (ACCC) has decided not to oppose energy company, Santos’, proposed acquisition of oil and gas company, Quadrant Energy.

Santos announced on 22 August 2018 the proposed acquisition of 100% of Quadrant Energy (Quadrant) for $2.15 billion, plus potential contingent payments.

Santos Managing Director and Chief Executive Officer, Kevin Gallagher, said the Quadrant acquisition delivers increased ownership and operatorship of a high-quality portfolio of low cost, long life conventional Western Australian natural gas assets which are well known to Santos.

“It is materially value accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier,” Gallagher said in a company statement.

“We already have very significant growth projects across our five core assets, and Quadrant’s recent oil discovery at Dorado is another exciting opportunity for us,” he added.

Santos has advised that the condition precedent for completion of the acquisition of Quadrant has been satisfied with the ACCC (Australian Competition and Consumer Division) decision not to oppose the acquisition.

Earlier this year, Australian natural gas company Santos announced the acquisition of 100 percent of Quadrant Energy for $2.15 billion plus potential contingent payments. The acquisition will have an effective date of January 1, 2018, according to Santos’ initial acquisition announcement.

The ACCC promotes competition and fair trade in markets to benefit consumers, businesses and the community, according to its website. The organization is an independent statutory authority that was established in 1995.

Santos and Quadrant are active in the production and supply of natural gas (and related condensate by-products) and crude oil in Western Australia. In addition, the ACCC approached the relevant WA government departments and no concerns were expressed about the proposed acquisition.

The ACCC found after detailed investigation that it is unlikely that the proposed acquisition will result in a substantial lessening of competition in the supply of gas to domestic customers in Western Australia.

“The ACCC considers that a combined Santos/Quadrant will continue to face strong competition from a range of suppliers, including large LNG producers such as Chevron and Woodside,” said ACCC Chair, Rod Sims.

“While the demand-supply balance could tighten in future, the ACCC considers that the proposed acquisition will not have a significant impact on future gas prices. “Most market participants believe the Western Australian domestic gas market is currently oversupplied.

“In Western Australia, gas exporters are required to reserve 15 per cent of their gas for the domestic market, so this should ensure that gas available for domestic customers continues to grow, and from a range of players,” he said.

Santos announced on 22 August 2018 the proposed acquisition of 100 per cent of Quadrant Energy for US$2.15 billion ($2.95 billion AUD) plus potential contingent payments.

Santos has advised that the condition precedent for completion of the acquisition of Quadrant has been satisfied with the ACCC decision not to oppose the acquisition. Completion is expected to occur within weeks.

Santos Managing Director and CEO Kevin Gallagher said the Quadrant acquisition delivers increased ownership and operatorship of a high quality portfolio of low cost, long life conventional Western Australian natural gas assets which are well known to Santos.

“It is materially value accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier,” said Gallagher.

“We already have very significant growth projects across our five core assets, and Quadrant’s recent oil discovery at Dorado is another exciting opportunity for us,” he said.

Santos Ltd., Adelaide, has been cleared by the Australian Competition and Consumer Commission (ACCC) for its proposed acquisition of Quadrant Energy Ltd., Perth. The $2.15-billion deal announced at the end of August is now expected to reach completion in a matter of weeks.

Santos said the condition precedent for completion of the acquisition of 100% of Quadrant had been satisfied with the ACCC decision not to oppose the deal. The acquisition includes Quadrant’s 80% share of the Dorado oil and gas discovery in the Bedout subbasin offshore Western Australia.

The terms include the upfront payment of $2.15 billion at completion on a cash and debt-free basis. There also are contingent payments linked to the Dorado oil and liquids 2C resource certification of greater than 100 million bbl and a future final investment decision on development of the field.

In addition, there will be royalty payment over any future Bedout subbasin project revenue excluding Dorado production of oil and liquids. Apart from Dorado, Quadrant has interests in many gas hubs and oil storage facilities in Western Australia.

“We already have very significant growth projects across our five core assets, and Quadrant’s recent oil discovery at Dorado is another exciting opportunity for us,” Mr. Gallagher said.

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