Meanwhile, UBS has valued the 3.6% slice of the South Australian oiler's PNG LNG stake that Japanese firm Marubeni is targeting at $US750 million.

While rumours of a deal have been widespread, Energy News understands some details of the deal have been misreported by other news outlets this week.

Quadrant (55%) operates the Devil Creek joint venture south of Karratha with Santos, which was opened in 2012 as the state's first domgas plant in nearly 20 years, with a production capacity of 220 terajoules of gas and 800 barrels of condensate per day.

It is understood Santos is aiming to get up to $US120 million for its two-thirds stake in the Stag oilfield, which Quadrant (33.33%) operates.

Stag has a conventional production platform connected to the Dampier Spirit floating, storage and offtake vessel which started production in 1998, with oil production capacity of 5500bopd.

Santos also owns 45% of the Reindeer field, which is connected to Devil Creek, John Brookes and Spar gas fields in the Carnarvon Basin.

Quadrant operates the processing infrastructure for the Harriet and John Brookes JVs at Varanus Island on the North West Shelf, with production capacity of up to 5000bopd of oil and condensate, and up to 390TJ a day of gas.

In total, Quadrant has over 81,000sq.km of exploration and retention acreage in 43 permits in Western Australia, over half of which were acquired in its former life as Apache Energy in the past five years.

Quadrant, which supplies more than 40% of WA's domestic gas and accounts for a significant proportion of Australia's oil production, says it has a strong focus on exploration and development activities.

Its main focus is the Exmouth and Carnarvon basins offshore north WA.

"We are regularly approached about our interest in buying, selling or partnering in various projects and properties," Quadrant director of government and public affairs David Parker told Energy News.

"For multiple reasons, we cannot comment on market speculation or other companies' interests in these matters."

Likewise, Santos was keeping its cards close to its chest, with a spokesman saying: "The strategic review is ongoing, and will continue to consider all proposals which deliver appropriate value and certainty for shareholders."

PNG LNG play

Energy News can also confirm that Japanese trading and investment house Marubeni Corporation has made a play for a slice of Santos' 13.5% PNG LNG stake, believed to be 3.6%.

While Fairfax said Marubeni, expected to close a deal this week by paying "significantly more" than $800 million, UBS said in a note to clients this week that it values a 3.6% stake in the project at about $US750 million.

"Our PNG LNG valuation for Santos assumes some value leakage from Santos having to pay $120 million to acquire a stake in P'nyang gas field.

"Santos is not a participant in this permit, but P'nyang will be the primary feedstock for PNG LNG Train 3, so is expected to acquire a stake in the permit at some stage ahead of T3 FID.

"We view the PNG LNG project as a world class LNG project, ticking pretty much every box we could ask for: The two existing LNG trains are fully operational and are outperforming nameplate capacity by a fair margin, there is high liquids content in the gas stream, high heating value LNG production, attractive fiscal terms, close to key Asian markets, ExxonMobil as operator and with expansion potential.

"Even still, there have been concerns that there would be limited interest in acquiring a minor stake in the project, especially in a low oil price environment, and pre-emptive rights likely over the sale process."

If the deal is pushed through, the deal has implications for PNG LNG joint venturer Oil Search, which will be gifted an immediate see-through value.

With $1 billion in liquidity, UBS said Oil Search "can likely pre-empt on the sale process and increase its stake" in PNG LNG.

The deal could also provide some validation for Woodside Petroleum's failed bid for Oil Search, however UBS rates the chances of the Aussie major returning with a higher bid as "unlikely".