Australia’s Santos said on Monday it has initiated a AU$3.5 billion cash raising to plug the debt holes caused by low oil prices.
Following the 82 percent drop in profit in first half of this year, Santos’ executive chairman, Peter Coates initiated a ‘strategic review’ that revealed additional options to cut on expenses.
Following the review, Santos has invited its shareholders to participate in a $2.5 billion entitlement offer.
Santos said in a statement issued on Monday, that it has reached an agreement to sell its 35% non-operated interest in the Kipper gas field, located in the Gippsland Basin, offshore Victoria to Mitsui E&P Australia for $520 million in cash.
It has also entered into a binding share subscription agreement with an affiliate of Hony Capital under which Hony will subscribe for 73,529,412 fully paid ordinary shares in Santos for a total value of $500 million, the statement reads.
According to Coates, “the company has made a $900 million reduction in capex and circa $370 million per annum in cost savings through headcount reductions of some 770 positions.”
It is expected that the company will further tighten its belt through strict financial discipline and a revised dividend framework that ‘better reflects the company’s exposure to oil-linked LNG pricing.’
1 AUD = 0.703130 USD
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LNG World News Staff; Image: Santos