(Bloomberg) – Santos Ltd. is restructuring the company’s oil and gas business in order to cut costs, according to an internal notice seen by Bloomberg, after a string of stymied takeover bids in recent years that have raised pressure to increase shareholder returns.
The company’s Australian and Papua New Guinean assets will report to four regional business units, instead of having individual management teams, according to executives familiar with the situation and an email sent by Brett Darley, Santos’ chief operating officer for Australia and PNG upstream oil and gas. The executives asked not to be named as the announcement is not public.
“By focusing on efficiency and productivity, discipline and innovation, we will ensure our business continues to deliver safe, reliable, and competitive energy for decades,” he wrote. The changes come as the company approaches the end of a multiyear phase of production growth, which will need it to shift focus toward improving profitability across its existing operations, according to the email.
Chief Executive Officer Kevin Gallagher has faced criticism after an attempted sale to aconsortiumled by the Abu Dhabi National Oil Co. faltered last year, and investors have demanded higher growth and returns. After reporting a slump in profit in February, Santos launched a review of its Australian operations and slashedits workforce.
Shareholders including Australian pension fund HESTA have pointed to a limited pipeline of new energy projects and declining green capital expenditures, while also criticizing Gallagher’s remuneration.
It was not immediately clear whether the overhaul would result in reduced headcount. Many Santos managers will need to relocate from their jobs in Western Australia to Brisbane, according to the executives.
The Alaska business unit will not be impacted by the changes, it said.
“At times, roles across the organization have relocated to align with activity levels and locations,” Santos said in an emailed statement. “With our organizational changes announced earlier this year, some activities and a small number of roles may be relocated to the appropriate operating centers.”
The corporate center will remain in Adelaide, the company said by email.
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