Santos shopping for LNG in the US

Santos is thought to be looking for LNG opportunities. Picture: Nathan Edwards.

The $17bn Australian-listed Santos is understood to have been shopping for liquefied natural gas opportunities in the US.

However, the understanding is that the energy group is yet to find an appealing target.

Santos’s desire to expand into ownership of LNG assets is understood to have been the major motivation for the group to explore a tie-up with its Australian-listed rival Woodside at the end of 2023 – a deal that never eventuated, despite the pair holding talks.

It is likely to kill off any hopes that the Kerry Stokes-backed Beach Energy may have for a buyout by Santos or a merger.

A deal for Beach to be folded into Santos would probably be ideal for the Stokes family, who own 30 per cent of the former, because a holding in Santos would be about 5 per cent, making divestment easier should the Stokes family wish to sell up.

A merger between Beach and Santos would also solve the issue of Santos succession planning, with Beach boss Brett Woods a former top Santos executive and able to take over from Santos boss Kevin Gallagher when he is ready to retire.

Sources describe him as highly respected within the top Santos executive team, which would mean other top Santos staff would be unlikely to leave when Mr Gallagher opts to depart.

On the one hand, Beach Energy is more cash-generative than Santos, which needs to fund its Narrabri gas project in NSW and Dorado project in WA.

But a deterrent for Santos is the fact that Beach is exposed to the Perth Basin, from which Santos has signalled a retreat. Santos would not want to double down on its Cooper Basin exposure, say sources. Also, Santos has plenty to think about, with its PNG and Beetaloo Basin expansion projects ramping up.

The Stokes family would probably want $1.80 to $2 per share for Beach Energy.

Beach Energy shares on Thursday closed 4.3 per cent higher at $1.20 while Santos shares closed 4 per cent higher at $5.56.