(Reuters) - Australian gas producer Santos Ltd (STO.AX) said on Thursday it expects to complete talks with suitor Harbour Energy within a few weeks, as the U.S. private equity-backed firm finalizes due diligence on its $10.4 billion takeover offer.
Chairman Keith Spence said there was no certainty that the Harbour proposal, Santos’ fourth unsolicited bid since August 2017, would lead to a binding offer that would win the support of the board.
“I expect the due diligence and engagement process will be concluded within a few weeks,” Spence told the company’s annual general meeting.
Harbour Energy approached Santos in April with a takeover offer of $4.98 a share, which at the time was worth A$6.50. Thanks to a rise in the U.S. dollar against the Australian dollar in recent weeks, the proposed bid is now worth A$6.64.
Santos on Thursday also said it would sell its non-core Asian assets to London-listed Ophir Energy Plc (OPHR.L) for $221 million, and said it plans to restart paying dividends if business trends and oil price gains are sustained.
Under the Ophir Energy deal, the firm will exit Vietnam, Malaysia and Bangladesh. Funds from the sale will be used to help pay down debt, which stood at $2.5 billion at the end of March.
Santos said its share of production from the assets being sold in first quarter of 2018 was 1.4 million barrels of oil equivalent.
The company said it expects to meet its target to reduce debt to $2 billion early in the second half of 2018, more than a year ahead of plan, which should help it revive its dividend.
“If the performance of the business continues on this trend and current oil price levels are sustained, the Board will look to restore dividends based on 2018 financial results,” Spence told shareholders.
Reporting by Devika Syamnath and Aaron Saldanha in Bengaluru; editing by Richard Pullin