Santos, Oil Search finalise A$21bn merger deal
Santos and Oil Search have finalised the A$21bn ($15.5bn) merger deal, the companies said on September 10. This follows both companies successfully completing reciprocal confirmatory due diligence, which began last month.
Under the terms of the merger, which was announced last month, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held. After the completion of the deal, Oil Search shareholders will own approximately 38.5% of the merged entity and Santos shareholders will own about 61.5%.
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The combined entity will be among the world’s top 20 oil and gas companies and have assets across Australia, Timor-Leste, Papua New Guinea (PNG) and North America. It will have production of about 116mn barrels of oil equivalent (boe)/year based on 2021 output, and reserves and resources of 4.87bn boe. Santos expects the merger to unlock pre-tax synergies of $90-115mn/year.
“The merger is expected to create greater alignment in Papua New Guinea supporting the development of key projects including Papua LNG, delivering new jobs, helping to support the local economy, and continuing to support the development of and investment in PNG,” Santos said. The combined entity will be led by Santos managing director and CEO Kevin Gallagher.
"The merger will create a company with a balance sheet and strong cash flows necessary to successfully navigate the transition to a lower-carbon future with the combination of Santos' leading CCS capability combining with Oil Search's ESG programmes in PNG and Alaska to provide a strong foundation," Gallagher said.
The completion of the merger remains contingent on Santos securing approvals, including from the PNG government and Oil Search shareholders. According to media reports, PNG deputy prime minister Samuel Basil on September 9 raised concerns about the deal and said the merger may hurt the domestic market. For more analysis, see last month's Gas in Transition magazine feature here.