Santos is predicted to unveil sweeping changes to its oil and gas production in a possible move to raise $3 billion in capital.
Management at the energy producer has been conducting a wide-ranging strategic review of the debt-laden business.
A global fall in energy prices meant that Santos took on a high amount of debt as it set out to build the $US18 billion Gladstone LNG project, in which it held a 30 per cent stake.
Last month, the Santos board knocked back a $7.14 billion takeover by private equity group Scepter Partner, calling it “opportunistic in nature”. The bid sent Santos shares soaring by almost $1 to $6.32.
The share price has since held up moderately well since the takeover offer of $6.88 a share, heightening market speculation the troubled energy producer would launch a capital raising. Santos shares closed on Friday 10c lower at $5.91.
A recent research note from UBS noted that Santos had about $3.5bn of debt maturing between 2015 and 2020.
The oil price was just under $US45 a barrel at the time of the bid and is still close to that level now, having run up to $US48 between times, so in simple terms the Santos share price has outperformed the oil price since the bid was announced.
The strategic review is investigating selling some of the company’s key assets to pay down its growing debt. Its crown jewel is a 13.5 per cent stake in the Papua New Guinea LNG project.