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Santos today announced a strategic relationship with existing shareholders ENN Group (ENN) and Hony Capital (Hony).

Santos today announced a strategic relationship with existing shareholders ENN Group (ENN) and Hony Capital (Hony). ENN and Hony are associated shareholders of Santos with an aggregate relevant interest of 15.1% of Santos shares. The strategic relationship will become effective and remain in effect for so long as ENN and Hony have a relevant interest in 15% or more of Santos shares.

The strategic relationship is based on mutual cooperation and assistance in order to support the growth of Santos. It is the intention of ENN and Hony that Santos will be the primary investment vehicle for material investment by them in upstream gas reserves and LNG production in Australia and PNG. ENN and Hony will support future investment by Santos and Santos will use reasonable endeavours to include ENN and Hony in investment opportunities where it is in the best interests of Santos shareholders as a whole.

Santos Chairman Peter Coates said: “Santos welcomes the formalisation of a strategic relationship with Hony and ENN. Hony became a major shareholder in 2015 and together with ENN has continued to support Santos through challenging times. We look forward to a closer relationship with Hony and ENN and their support for the continued growth of Santos for the benefit of all shareholders.”

Chairman Wang, founder of ENN said: “ENN and Hony strongly support the new growth strategy of Santos under the leadership of CEO Kevin Gallagher and the Santos Board. The strategic relationship will effectively link up the upstream E&P competence of Santos with China’s fast growing downstream market of natural gas, and explore many opportunities for Santos to realise its full potential as a leading producer of gas and LNG.”

As part of the strategic relationship, Mr Eugene Shi will join the Board as a non-executive director. Mr Shi is Vice President ENN Ecological Holdings Ltd and has more than 20 years experience across capital markets, M&A, strategy and business development.

The agreement will terminate if ENN and Hony cease to have a relevant interest in at least 15% of Santos shares or may be terminated by Santos, ENN or Hony 12 months after ENN ceases to have any nominee Director on the board of Santos.

The agreement contains confidentiality provisions and restrictions on trading whilst the nominee Director is in the possession of Board information. Further, the agreement includes relevant protections for all shareholders, including trading restrictions around confidential information and supporting a board recommendation in the event of a change in control transaction, subject to certain conditions.

A copy of the agreement between Santos, ENN and Hony is attached to this release.