The Origin Energy Ltd (ASX: ORG) share price has barely flinched on news that ConocoPhillips (NYSE: COP) has exercised its pre-emptive rights to purchase Origin's 10% stake in Australia Pacific LNG (APLNG) for $2.21 billion.

Shares in the ASX energy giant dipped 0.2% to $5 in morning trade as the S&P/ASX 200 Index (ASX: XJO) hovered at break even.

The Origin share price has since gone green but it is only slightly up. At the time of writing, it is trading at $5.02, up 0.20%.

A large cash injection from divestments usually generates more excitement for the ASX shares involved. But there's a good reason why investors have barely batted an eyelid in Origin's case.

Origin share price unmoved by $2bn deal

The ConocoPhillips move is in response to Origin's proposed sale of its stake in the APLNG joint venture to EIG Partners. EIG was hoping to become the world's first private equity group to buy into an operating integrated LNG project.

But Origin's JV partner ConocoPhillips has pre-emptive rights and has chosen to effectively lock out EIG from the deal.

The other JV partner in APLNG is China Petroleum & Chemical Corporation (HKG: 0386), also known as Sinopec. It hasn't indicated what it will do. Sinopec has until 17 December to exercise its respective pro-rata pre-emption rights, according to Origin.

Why the Origin share price is not reacting

Following the sale of Origin's 10% stake, it will still own 27.5% of APLNG. It will also remain the operator of the gas project. ConocoPhillips currently owns 37.5% of the JV, with the balance in Sinopec's hands.

The Origin share price is shrugging off the news because investors are not expecting a capital return.

Origin management plans to keep the sale proceeds to help it transition to a carbon-friendly energy company.

More M&A in ASX energy sector expected

This is unlike other ASX 200 companies that have returned all, or part, of the cash from asset sales. It really matters little to shareholders who buys Origin's minority stake in APLNG.

The Queensland-based APLNG is one of the largest natural gas producers in eastern Australia. It has a long-term supply contract with Sinopec and Japan's Kansai Electric.

The only obvious loser is EIG, which will need to find a new way of getting back into the ASX.

EIG's $11 billion bid for Santos Ltd (ASX: STO) was knocked back in 2018. It also sold out of Senex Energy Ltd (ASX: SXY) in 2019, as reported by Reuters.

There's a lot of merger and acquisition interest in the energy sector, too. The mega-deal between BHP Group Ltd (ASX: BHP) and Woodside Petroleum Limited (ASX: WPL) is dominating the spotlight.

The post Origin (ASX:ORG) share price shrugs off $2.21 billion APLNG sell-down appeared first on The Motley Fool Australia.

Last year, S&P/ASX 200 Index (INDEXASX: XJO) energy share Santos Ltd (ASX: STO) announced an agreement to purchase the Australian west LNG assets of ConocoPhillips (NYSE: COP). For US$1.39 billion, the company would acquire an estimated ~16% earnings per share accretion in 2020.

But then everything went wrong. Santos has been buffeted on both sides during the past 2 months through no fault of its own. The pandemic has effectively killed off demand while the Saudi-Russian oil price war has created a supply glut. A perfect storm that would have killed off a less well-managed company.

Nevertheless, Santos is well placed to weather this storm. It has used the current crisis to drive a transformative action plan. 

A disciplined ASX energy share

On 23 March 2020, Santos announced a $550 million (38%) reduction in 2020 capital expenditure. Santos also announced a $50 million reduction in 2020 cash production costs and is targeting a free cash break-even point of US$25/bbl. For a large scale capital intensive company, this is an outstanding effort. 

Even with the strains of coronavirus, Santos has produced the highest Cooper Basin gas production in 9 years. The company also generated $265 million of free cash flow in Q1 of CY2020. 

Strong balance sheet

The company is carrying more than US$3 billion in liquidity. This comprises US$1.15 billion in cold hard cash and US$1.9 billion in committed yet undrawn debt facilities.

In a wise tactical move, Santos unloaded a 25% stake in the Darwin LNG facility and the Bayu-Undan gas field to South Korean energy group SK E&S. It also has a letter of intent signed to sell-down a 12.5% interest in Barossa to JERA. This will allow Santos to pay for the ConocoPhillips acquisition in cash and $750 million 2-year debt.

Santos has also managed to sustain consistent pricing amid these turbulent times. The company has ~70% of volumes tied to prices via fixed price domestic gas sales, and oil hedged at an average floor price of US$39/bbl.

Add to this Santos has full control over current capital expenditure decisions with all major capital projects yet to take final investment decisions.

Foolish takeaway

The oil and gas sectors remain the blood of nations. For this reason, they remain the main industry globally to be protected by private armies. Oil and gas are likely to stay that way for the foreseeable future until genuine scalable alternatives emerge in the energy markets.

While the oil price is low now, it will rise again over time. Santos is, in my view, the best-placed ASX energy share to emerge from the pandemic structurally stronger than it was in January 2020. Its share price remains 41% down year-to-date.

The post Is Santos the best ASX 200 energy share? appeared first on The Motley Fool Australia.