Santos has received the go-ahead from the Australian Competition and Consumer Commission (ACCC) after announcing in late August that it had entered a deal to acquire Quadrant Energy.
After announcing in late August that it had entered a deal to acquire Quadrant Energy, Santos (ASX:STO) has now received the go-ahead from the Australian Competition and Consumer Commission (ACCC).
In a statement released Friday (November 16), the ACCC said it was “unlikely” that the proposed US$2.15-billion acquisition would lead to a significant drop in competition amongst domestic gas suppliers 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,” ACCC chair Rod Sims said in the statement.
“Most market participants believe the Western Australian domestic gas market is currently oversupplied. 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.”
With the green light from the ACCC now secured, Santos intends to complete the acquisition “within weeks”. Managing director and CEO Kevin Gallagher discussed the deal in a statement, where he said acquiring Quadrant would boost ownership and operatorship of a high quality portfolio.
“It is materially value accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier,” Gallagher said. “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.”
Quadrant has a number of natural gas and oil assets under its belt, along with development, appraisal and exploration assets than span over 52,000 square kilometres. According to the company, its primary focus is on activities in the Exmouth and Carnavon Basins, located offshore in Western Australia.
Despite the positive news, Santos shares were down 0.64 percent at the end of trading on the ASX on Friday November 16, closing at AU$6.17 per stock.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.