By DALE LUMA
MARKET capitalisation will drop by 30 per cent if Oil Search leaves the PNG Stock Exchange (PNGX) due to a possible Santos merger, says PNGX chairman David Lawrence.
According to PNG Securities Commission, the current size of the PNG stock market is about K120 billion – with 13 listed companies.
Lawrence said Oil Search was a key part of the PNG market and PNGX was hoping that Santos would join if the merger succeeded.
It will also give the existing 5,000 Oil Search investors in PNG continued access to the market, he said.
“That change increases the visibility of the Papua New Guinea market internationally which further serves to attract international investment,” Lawrence said.
“We are hoping and believe the PNG Government is also working towards Santos’ listing in Papua New Guinea.”
The proposed deal is worth AU$21 million (about K53 billion).
Oil Search shareholders will own 38.5 per cent of the group while Santos shareholders will own 61.5 per cent.
Commerce and Industry Minister Sam Basil said the merger had economic implications for PNG.
“The planned merger between Oil Search and Santos can bite both ways,” Basil said.
“Oil Search is a PNG company publicly listed in the PNG National Stock Exchange first, and in the Australian stock exchange while Santos is not listed in Papua New Guinea,” he said.
“From our perspective, this is an outbound transaction.
“At the conclusion of this merger process, Oil Search ceases to exist.
“If the arrangement succeeds, shareholders will become shareholders of an Australian company which has no presence in the PNG capital market.
“The merged entity, which will be a foreign company, will be the biggest partner in the PNG LNG project with a more than 42.5 per cent stake.”
By DALE LUMA