(Bloomberg) – Santos Ltd. Chief Executive Officer David Knox is stepping down as a slide in crude prices increases pressure on the Australian oil producer, stoking speculation it could become a takeover target.
Santos is carrying out a review of its options, the Adelaide-based company said in a statement Friday after reporting an 82 percent drop in first-half profit. Knox, who has been in the role for about seven years, will depart once a successor has been named, Santos said.
The plunge in energy prices has hurt Santos as it prepares to start its $18.5 billion liquefied natural gas project in Queensland state. The Australian producer has cut spending and jobs while flagging potential asset sales as it copes with the oil market downturn. Santos fell as much as 7.7 percent to A$5.18 in Sydney, the lowest since 2003, in intraday trade.
“Underperforming companies that lose their leadership are the ones that get taken out,” Neil Beveridge, an analyst at Sanford C. Bernstein & Co. in Hong Kong, said by phone. Perth-based Woodside Petroleum Ltd. and France’s Total SA are the most likely potential buyers, he said.
“In light of the continuing pressure on the Santos share price in recent months and approaches from other parties concerning various assets and strategic opportunities, the board has decided to conduct a full strategic review to examine all options,” Santos said.
Santos shares have fallen 62 percent in the last year, compared with a 27 percent loss for rival Woodside.
Santos Chairman Peter Coates will assume the role of executive chairman and take responsibility for conducting the strategic review with the assistance of Deutsche Bank AG and Lazard Ltd. as advisers, Santos said.
“Santos pursued an overly aggressive growth strategy, and the fall in commodity prices has left them very exposed given the high levels of debt within their business,” Beveridge said.