The acquisition will see Santos build its position in the Gippsland gas hub by becoming the largest interest holder (90%) and operator of the Patricia Baleen and Sole gas fields and associated processing facilities at the Orbost plant in eastern Victoria.

It also takes Santos’ interests in the South Australian Cooper Basin oil and gas fields, which supply gas under long term contracts to Adelaide, Sydney and Canberra, to more than 66%.

The OMV interests to be acquired by Santos are: VIC/L21 Patricia Baleen gas field and associated processing facilities (40%); VIC/RL3 Sole gas field (40%); VIC/RL1 Golden Beach gas field (33%); VIC/P55 exploration block (33%); and South Australian Cooper Basin (2.1%).

Santos managing director John Ellice-Flint described these acquisitions as “a strategic move.”

“There is good upside for Santos in picking up these assets as a total portfolio as it maintains our position as a key gas supplier to gas markets in the southern and eastern states,” he said.

“It is a strategic transaction that provides Santos with operating interests in the emerging alternative gas hub in the Gippsland Basin. The Gippsland hub is at a strategic pipeline crossroad with connections to Victorian, NSW and Tasmanian markets while our Moomba hub has been supplying customers for over three decades.”

Santos is already operator of the Golden Beach gas field, the VIC/P55 exploration permit and the Cooper Basin oil and gas fields.

The sale of Basin Oil to Santos has an effective transfer date of 1 January 2005. The acquisition is subject to relevant government approvals, with the transaction expected to be completed in the second quarter of this year.

As a result of the transaction, Santos will add 8 mmboe of proven and probable reserves from Patricia Baleen and Cooper Basin with additional 2005 production of approximately 1.3 mmboe. This does not include Sole or Golden Beach fields.

Santos shares closed seven cents lower at $8.78 on Thursday.