By David Winning
SYDNEY--Santos Ltd. (STO.AU) could become the latest Australian
energy company to tap European debt markets for funding, as it
nears the startup of a US$18.5 billion gas-export plant in the
eastern state of Queensland that will fuel a step-change in its
output.
Santos said it is considering a "50% equity credit European
hybrid issue" that would enable it to refinance existing debt and
strengthen its balance sheet at a time when global oil prices have
fallen sharply. The Adelaide-based company didn't say how much it
would look to raise.
It comes two months after Origin Energy Ltd. (ORG.AU) raised 1.4
billion Australian dollars (US$1.2 billion) through a
euro-denominated hybrid debt issue.
Santos is transforming itself from an oil producer into a
company that makes most of its revenues and profits from selling
natural gas as a clean fuel to Asian customers. The company owns a
minority stake in the US$19 billion PNG LNG export facility in
Papua New Guinea, and is targeting first production of liquefied
natural gas from the GLNG plant in Queensland in the second half of
2015.
At an investor day Wednesday, Chief Financial Officer Andrew
Seaton said the startup of the GLNG facility and cargoes shipped
from PNG LNG would push up Santos's production to between 57
million and 64 million barrels of oil equivalent in 2015.
Santos also narrowed its production target for 2014 to 53
million to 55 million barrels of oil equivalent, from previous
guidance for 52 million to 57 million.
-Write to David Winning at david.winning@wsj.com
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