Santos plays ‘straight bat’ to Wang Yusuo criticism

Santos is remaining calm in the face of credibility attacks by Chinese billionaire Wang Yusuo.

ENN chairman Wang Yusuo is after a board seat at Santos. Picture: AFP.

Santos is remaining calm in the face of credibility attacks by Chinese billionaire Wang Yusuo.

Mr Wang is waging a campaign to win a board seat at the $7 billion Adelaide oil and gas producer after his ENN gas supply company stormed on to the share register in March with an 11.7 per cent stake picked up from Chinese private equity group Hony Capital.

Amid claims by Mr Wang in a letter to Santos chairman Peter Coates that Santos needed to improve its leverage position and put in place a more effective board, Santos played a straight bat.

“Santos will update the market on how we have stabilised the business and our strategy for the future at our investor day in December,’’ a spokesman said.

The agitation has not hurt the Santos share price. It rose 6c to $4.06 yesterday with the help of a rebound in oil prices. Speculation that ENN’s frustration could boil over into a takeover bid saw Santos shares drive towards $5 in June.

ENN on the other hand has been under pressure in its home market of Hong Kong, with its shares down by more than 20 per cent since April.

The takeover speculation gained fresh momentum last week when Hony was outed as having acquired 40 million shares in Santos at $3.98 a share, a then 11 per cent premium to the market. More than that, Hony was also outed as now having returned to the register with an all-up holding of 3.2 per cent.

There has been no notice to the stock exchange saying that the ENN and Hony positions are related. On a combined basis, the two companies now hold 14.9 per cent of Santos. Foreign investors need clearance from the Foreign Investment Review Board to move beyond 14.9 per cent.

Despite the talk of an ENN takeover bid for Santos, gaining FIRB clearance would not be without its challenges. Santos is a key player in both the Australian gas market and the LNG export market.

Any foreign bid would be viewed against a backdrop of national concern about rising ­prices in the domestic markets brought on by the start of the Queensland LNG export projects — including one by Santos — and exploration bans and other impediments in the eastern states as well as the Northern Territory limiting new discov­eries.