Santos offers A$730 million for Eastern Star Gas

Santos, Australia's largest domestic gas producer, today said it would acquire Eastern Star Gas (ESG), for A$730 million ($777.5 million) to become the largest holder of natural gas reserves in New South Wales state.

Santos, which holds 20.9 per cent of ESG, will buy the remaining 79.1 per cent by offering 0.068 Santos shares for every ESG share. Based on Santos's closing share price of A$13.23 on 16 July, the offer is valued at $0.87 per Eastern Star share or a total of $924 million.

The proposed acquisition will give Santos 80 per cent of ESG's coal seam gas permits in the Gunnedah Basin, with Australia's largest home and business energy supplier, TRUenergy holding 20 per cent.

Santos first acquired interests in the Gunnedah Basin in 2007, and in 2009 acquired a 20-per cent holding in ESG and a 35-per cent equity interest in various exploration permits operated by ESG.

Sydney-based ESG is an explorer, developer, producer and seller of coal seam gas in Australia. The Company owns the Narrabri Gas Project located in Petroleum Exploration Licence (PEL) 238 adjacent to the township of Narrabri in New South Wales. ESG holds a 65-per cent interest in PEL 238 and is the operator. The remaining 35 per cent interest is held by Santos.

Founded in 1954, Adelaide-based Santos is one of the country's leading gas producers since the past 40 years and today is one of the largest producers of natural gas to the Australian domestic market. It also supplies natural gas to Asian customers.