The Santos Ltd (ASX: STO) share price is climbing during Thursday morning trade. This comes after the company announced its decision to divest its interest in the Barossa project.
At the time of writing, the energy producer's shares are up 0.3% to $6.75 apiece.
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Santos offloads Barossa project
Investors are pushing Santos shares into positive territory despite the broader S&P/ASX 200 Index (ASX: XJO) shedding 0.1% today.
After yesterday's market close, Santos advised it had entered into a sale and purchase agreement (SPA) with Jera Co.
Founded in 2015, Jera is a joint venture between the Tokyo Electric Power Company, and Chubu Electric Power. The company offers thermal power, business development, optimisation, engineering, operation, and maintenance services to its customer base in Japan.
Most notably, Jera has a 6.1% stake as an existing partner in Darwin LNG. Acquiring a foothold in the Barossa project is expected to complement the company. This is because of the development and processing of Barossa gas through Darwin LNG facilities.
Under the deal, Santos will sell a 12.5% interest in the Barossa project to Jera for approximately $300 million.
Completion of the sale is estimated to occur sometime within the first half of the 2022 calendar year.
Barossa is one of the lowest cost, new LNG supply projects in the world today. Acquiring a foothold in the project gives Santos and its partners a competitive advantage in a tightening global LNG market.
The Barossa project is on track for its first LNG production in the first half of 2025. The gas pipeline will run through the existing Bayu-Undan to the Darwin LNG pipeline.
Santos is also progressing the carbon capture and storage (CCS) opportunity at Bayu-Undan in the Timor Sea. Once developed, this could provide a CCS hub for projects in the region, including Barossa.
What did management say?
Santos managing director and CEO, Kevin Gallagher commented:
JERA is a long-standing partner and customer at Darwin LNG. We are delighted to have finalised our agreement with JERA consistent with the terms of the Letter of Intent that was agreed shortly after the announcement of the acquisition of ConocoPhillips' interests in Barossa. I welcome JERA as a partner in the Barossa project and look forward to continuing to build on the important long-term relationship between our two companies.
Santos share price summary
Over the past 12 months, Santos shares have registered gains of almost 5%. However, when looking at year-to-date, its shares are around 7% higher.
Based on today's price, Santos commands a market capitalisation of roughly $14.02 billion and has approximately 2.08 billion shares outstanding.
