Deals likely off the table for Santos as M&A head departs

Aerial shots of first 'large' offtake tanker at LNG terminal Darwin, Northern Territory, Australia. Picture: Supplied

The man Santos has tasked with buying businesses has left the $25bn South Australian-based gas producer, in what many are taking as a clear sign that any major acquisitions are off the table for at least the near term.

Andrew Blakely, Vice President Strategy and Business Development, has retired from Santos, departing last week, say sources.

The news filtered out as industry experts gathered in Sydney for the Australian Energy Producers Conference and Exhibition last week.

Santos became a key focus late last year after it entered talks with Woodside about the latter launching a $24bn-plus buyout but they did not eventuate in a transaction.

Some believe that Santos is under pressure to reorganise its Australian portfolio because its domestic development assets have been bogged down in legal and regulatory delays, and there are risks around GLNG over reserves and capital spending.

Yet it is not expected to be getting out its cheque book in the near term, say sources, with the funding of its existing projects to think about.

Investment bankers in the sector have shopped Santos in the past twelve months to a number of global groups, but have not had success in finding a suitor and some expect a break up or asset sales could now happen.

Globally, the most prevalent deals playing out involve scrip mergers between major energy players.

Premiums for oil and gas mergers are lower than the 30 per cent premium usually required to get a buyout across the line because smaller operators are under pressure to get bigger.

Meanwhile, as reported by DataRoom on Tuesday, Australian energy banker Andrew Sutherland is departing JPMorgan.

The Wall Street bank said Mr Sutherland’s duties would be undertaken by Tim Foy, whose role will be expanded to cover Infrastructure and Utilities, including Power and Renewables.

Mr Foy joined from Credit Suisse in July as Head of Infrastructure.

Mathew Hocking will lead the Natural Resources sector, which would include Energy, Metals and Mining.

Mr Sutherland, a managing director, joined JPMorgan in 2015 from Goldman Sachs, where he worked since 2011.

Before that time, he worked at UBS as head of investment banking in New Zealand from 2009.