Cooper Energy purchases Santos's holding in Sole gas project

Santos has sold its remaining Victorian gas assets in an $82 million deal with fellow ­Adelaide company Cooper ­Energy.

Cooper Energy managing director David Maxwell. Photo: David Cronin

Santos has sold its remaining Victorian gas assets in an $82 million deal with fellow ­Adelaide company Cooper ­Energy that will free Santos from $140m of longer-term aban­donment costs and a looming $300m capital spend on the Sole gas project.

Cooper, which is embarking on a $63m equity raising to ­finance the purchase, described the deal as “transformational”, pointing to a fourfold production rise and ninefold reserves boost as well as an increase in workforce ­experience.

If the deal succeeds, the ­immediate task before Cooper managing director David Maxwell will be to secure finance and a joint venture partner for the $600m Sole gas project in the offshore Gippsland Basin, which it will own 100 per cent after the deal with Santos.

After Santos agreed to sell its 35 per cent stake in the Kipper gas field in Bass Strait to Mitsui last year for $520m, new managing director Kevin Gallagher has kept his divestment focus on Victoria for his first asset sale, as he tries to reshape the Santos portfolio to avoid extra spending and keep cash-positive at $US35-$US40 a barrel oil prices.

“This sale is in line with our stated objective to rationalise and shape our asset portfolio in order to become a low cost, ­reliable and high performance business,” Mr Gallagher said.

The assets that have been sold are a 50 per cent stake in the producing Casino-Henry gas project and a 10 per cent interest in BHP Billiton’s Minerva gas project, both in the offshore Otway Basin, the 50 per cent of Sole that Cooper did not own and 100 per cent of the largely depleted ­Patricia-Baleen and associated plant in the Gippsland Basin.

The sale price includes $140m of abandonment liabilities likely to be incurred mostly after 2025.

Santos shares slipped 11c, or 2.9 per cent, to $3.73, on a day when the broader energy sector slipped 1.5 per cent.