Santos A$3 billion Offering

123jump.com Staff
11 May, 2009
New York City

Australian business conditions improve in April. Santos to raise A$3 billion for expansion in Papua New Guinea and repay $600 million of hybride securities issued in 2004. Exxon controls 41% stake in the venture. Fortescue Metals Group may list its shares in Shanghai.

[R]3:00AM New York, 7:00PM- Australian business conditions improve in April. Santos to raise A$3 billion for expansion. Fortescue Metals Group may list its shares in Shanghai.[/R]

The benchmark stock index fell marginally as gold prices declined 0.1% to $914 per ounce and crude oil prices slipped 0.8% to $58.20 per barrel.

National Australian Bank reported that business confidence index in April declined1 to negative 14 after dropping to low in January and rebounding in February and March. The employment index recovered to minus 18 from minus 29 and business conditions index increased to 7 to minus 10.

In Sydney trading ASX 200 index dropped 0.4% or 15.7 to 3,926.00 and the dollar hovered around 76.60 U.S. cents. The Australian dollar may test the trading range of 80 U.S. cents if the current optimism about the global economy prevails.

Of the ASX 200 index stocks, 94 advanced, 86 declined, and 20 were unchanged. Murchison Metals led gainers in the index shares with a rise of 24.2% followed by Valad Property increasing 23.5%.

Australia Business Confidence Unchanged

National Australia Bank reported today that the sentiment index- that gauges business confidence dropped 1 point to –14 in April after rising in February and March.

A measure below zero in the survey conducted for more than 400 companies indicates that pessimists outnumber optimists.

NAB chief economist Alan Oster said, “The April survey result, if maintained during the second quarter, would imply a moderate return to demand and gross domestic product growth.

Oster notes that the 4.25 percentage points interest rate reduction by the Reserve Bank of Australia will help to promote domestic demand.

The bank’s employment index gained to -18 from - 29 and forward orders advanced to minus -11 from -18.

Australia’s jobless rate is forecasted to increase to 6.75% at the end of the year and 8% by late 2010.

Santos to Raise A$3 billion for Expansion

Santos reported today that it plans to raise A$3 billion in an equity raising that will be used to fund its expansion in Papua New Guinea. The energy explorer also reaffirmed its guidance of 42 Australian cents dividend.

The company is also considering selling unloading a stake in its Gladstone liquefied gas project after selling 40% of its planned LNG processing plant to Petronas of Malaysia for A$3.3 billion in May last year.

The company is offering in rights issue two shares for every five shares owned by shareholders.

At least A$1.65 billion will be raised from institutional investors and A$1.35 billion in non-underwritten retail component. The shares are expected to be priced at A$12.50 per share, a 27% discount to Friday''s close at A$17.09.

Santos intends to fund the construction of the US$16 billion Exxon Mobil-led PNG LNG project in Papua New Guinea. Exxon is the operator and the largest shareholder with 41% stake in the venture and Santos stake will decline to 13% after Papua New Guinea participates in the offering.

Santos also reiterated its 2009 production estimate between 53 million and 56 million barrels of oil equivalent.

Gainers & Losers

Murchison Metals led gainers in the ASX 200 index shares with a rise of 24.2% followed by gains in Valad Property of 23.5%, in Kagara Ltd of 19.2%, in Platinum Australia of 19%, and Fortescue Metals of 16.3%.

Resource stock increased. Sundance Resources climbed 11.5% and Minara
Resources jumped 11%.

Asciano Group led decliners in the ASX 200 index shares with a drop of 12.2% followed by losses in Australian Agriculture of 9.2%, in GWH International Ltd. of 7%, in Paperlinx Ltd. of 5.9%, and Felix Resources of 5.6%.