The acquisition is expected to enable Santos to leverage Quadrant’s offshore operating capability across its Western Australia and Northern Australia portfolio.

Santos will buy 100% of Quadrant for an upfront payment of $2.15bn on a cash and debt free basis.

The acquisition is part of Santos’s growth strategy to build on existing infrastructure positions around its core assets.

Santos managing director and chief executive officer Kevin Gallagher said: “This acquisition delivers increased ownership and operatorship of a high quality portfolio of low cost, long-life conventional Western Australian natural gas assets which are well known to Santos, and importantly significantly strengthens Santos’ offshore operating capability.

“It is materially value accretive for Santos shareholders and advances Santos’ aim to be Australia’s leading domestic natural gas supplier.”

Mainly located in the Carnarvon Basin offshore Western Australia, Quadrant’s assets include natural gas and oil production, near and medium term development, appraisal and exploration assets across more than 52,000 km2 of acreage.

In 2017, the company’s share of production from the assets was 19 million barrels of oil equivalent (mmboe).

The acquisition is expected to increase Santos’ 2P reserves by nearly 26% to 220 mmboe.

Quadrant’s portfolio also includes a large inventory of discovered resources to backfill existing infrastructure and a leading position in the highly prospective Bedout Basin, including the recent significant oil discovery at Dorado.

Santos said in a statement: “Quadrant’s portfolio of high-margin conventional domestic natural gas assets backed by medium to long-term CPI-linked offtake contracts provide strong and stable cash flows, and compliment Santos’ predominantly oil-linked revenues.”

The transaction is expected to be completed by the end of 2018 and is subject to customary consents and regulatory approvals.

Santos intends to fund the acquisition through existing cash resources and $1.2bn in new committed debt facilities.