Following through on a deal announced in May, Santos has completed the sale of its non-core Asian assets to Ophir Energy.

Following a May announcement, Santos (ASX:STO) has completed the sale of its non-core Asian portfolio to Ophir Energy (LSE:OPHR).

With the sale’s completion, Santos has received cash proceeds of US$144 million, representing the US$221-million sale price after standard adjustments such as net free cashflows generated by the assets.

Santos’ net debt was reduced to around US$2.2 billion by strong free cashflows as of August 31, 2018. The company expects the amount will be further reduced by the Asian asset sale proceeds, and will help the company reach its US$2-billion net debt target by October, more than a year ahead of schedule.

As mentioned, the sale was initially announced in early May. It is part of the company’s strategy to gain value from its “late-life non-core assets,” and the plan will also see Santos remove its presence from Vietnam, Indonesia, Malaysia and Bangladesh.

The portfolio sold to Ophir was “not prioritized for capital,” according to Santos; the company’s share of production from the assets was 1.4 million barrels of oil equivalent in 2018’s first quarter.

The assets sold to Ophir were as follows: 31.875 percent of Block 12W PSC2 (Chim Sáo and Dua oil fields), Vietnam; 67.5 percent of the Madura Offshore PSC (Maleo and Peluang gas fields), Indonesia; 45 percent of Sampang PSC (Oyong and Wortel gas fields), Indonesia; 20 percent of Deepwater Block R PSC (Bestari oil discovery), Malaysia; 45 percent of SS-11 PSC, Bangladesh; 50 percent of Block 123 PSC and 40 percent of Block 124 PSC, Vietnam.

All Santos employees affiliated with the assets in the sale will be transferred to Ophir as part of the deal.

Santos Managing Director and CEO Kevin Gallagher discussed the sale in the May announcement, explaining that the transaction will allow the company to focus more closely on its other assets.

“The sale of the Asian assets further delivers on our undertaking to simplify our business and focus on our five core long-life natural gas assets in Australia and Papua New Guinea,” he said.

Gallagher added, “[w]e have always believed the Asian assets are a quality portfolio and are pleased to achieve an attractive outcome for our shareholders. Santos will work with Ophir to ensure a smooth transition, including the transfer of all the Santos employees to Ophir.”

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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