Santos shares in the red

SHARES in oil and gas explorer Santos are trading more than 25 per cent lower after it came out of a trading halt related to a $1.17bn capital raising.

Santos incoming chief executive Kevin Gallagher. Supplied.

SHARES in oil and gas explorer Santos are trading more than 25 per cent lower after it came out of a trading halt related to a $1.17bn capital raising.

Oil and gas explorer Santos has raised $1.17 billion from an institutional entitlement offer as the company tries to slash debts amid the global energy price crunch.

Santos said around 86 per cent of entitlements were taken up by eligible shareholders. A shortfall bookbuild cleared at $4.60 per share -- a 20 per cent premium over the $3.85 offer price.

Shares were trading at $4.39 at 10.45 AEST.

“The successful uptake of the institutional entitlement offer is a clear sign of confidence in the package of capital initiatives Santos announced this week to strengthen our balance sheet and restore long term value for shareholders,” executive chairman Peter Coates said.

The retail component of the group’s planned $2.5bn offer is expected to raise $1.35bn and opens on Tuesday.

The measures a part of a suite of initiatives Santos unveiled last week, including a new equity raising, private placement and stake sale designed to reduce the company’s overall net debt. The measures come after a strategic review of the business, which has been stung by the recent weakness in global energy prices.

Santos has been hit hard by the global fall in energy prices ­because of the high amount of debt it took on to build the $US18 bn ($25.6bn) Gladstone LNG project, in which it has a 30 per cent stake.

An 82 per cent fall in first-half profit resulted in job cuts, a reduction in capital expenditure and the removal of chief executive David Knox in August.

New chief executive Kevin Gallagher commences early next year.