Santos Appoints David Knox as Chief Executive Officer

By Angela Macdonald-Smith

July 29 (Bloomberg) -- Santos Ltd., Australia's third- biggest oil and gas producer, named David Knox, a former head of BP Plc's local unit, chief executive officer as it faces the removal of regulations that prevented a takeover.

Knox, 50, will be paid a fixed salary of A$1.75 million ($1.7 million), Adelaide-based Santos said today in a statement to the Australian stock exchange. He is the ``best person to lead Santos in its next phase of domestic and international expansion,'' said Chairman Stephen Gerlach.

The new CEO must steer Santos through the removal Nov. 29 of a state-imposed 15 percent cap on individual shareholdings that opens it up to a potential takeover for the first time. Knox, who has been acting chief executive since March, announced in May a $2.51 billion investment by Petroliam Nasional Bhd. in a Santos project in Queensland, after the Malaysian company outbid rivals to buy into the venture.

``From here on in, if Santos don't do a good job they will get taken over or at least approached, and the board obviously feels that given the Petronas deal, Knox is able to achieve that,'' said Aiden Bradley, an energy analyst at ABN Amro Australia Pty in Sydney. ``Knox was a bit of an untested entity at that level, yet once he delivered the Petronas deal, that was it.''

Santos rose as much as 71 cents, or 4.2 percent, to A$17.80 in Sydney trading, poised for its biggest gain in two months. The shares have advanced 36 percent since Knox was appointed interim chief executive on March 25 because of optimism among some investors that he may help drive expansion, speculation over potential takeover approaches and gains in crude-oil prices.

LNG Expansion

``An international executive search firm was retained, and Santos considered both internal and external candidates before the board determined to appoint David,'' Gerlach said in the statement. He said in March Knox would be a ``strong candidate'' for the role.

Knox has been responsible for Santos's expansion into liquefied natural gas and new ventures in Indonesia. He was previously managing director for BP Exploration & Production in Australasia, from 2003 to 2007, and earlier worked for Atlantic Richfield Co. and Royal Dutch Shell Plc.

Santos is planning a A$7.7 billion LNG project in Queensland state, together with Petronas, that will use coal- seam gas as a fuel. It is also a partner in an $11 billion LNG project in Papua New Guinea led by Exxon Mobil Corp., the biggest U.S. oil company. Santos may have stakes in four producing LNG projects by 2020, the company said last month, giving it access to international prices for gas, which are higher than in Australia.

Santos last week cut its full-year production forecast by as much as 6.9 percent because of the shutdown of a gas plant and the sale of a stake in coal-seam gas fields to Petronas.

Knox's fixed salary will be reviewed annually, while he also has access to short- and long-term incentives, Santos said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net