Santos, Oil Search merger becomes effective

The merger of Santos and Oil Search is now effective following the approval of the National Court of Papua New Guinea (PNG). Oil Search on December 10 lodged a certified copy of the orders with the PNG registrar of companies.

The deal was cleared by Oil Search shareholders on December 7 and the securities commission of PNG on December 6. PNG’s competition watchdog approved the proposed merger on December 8. It is expected that trading in Oil Search shares will be suspended from trading in PNG and Australia on December 10. 

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%. New Santos shares are expected to begin trading on December 13. 

“Santos and Oil Search are stronger together and will have increased scale and capacity to drive a disciplined, low-cost operating model and unrivalled growth opportunities over the next decade,” Santos CEO Kevin Gallagher said.

“The merger creates a company with strong and diversified cash flows, providing a platform to deliver shareholder returns and successfully navigate the transition to a lower-carbon future,” Gallagher added.

The combined entity will be among the world’s top 20 oil and gas companies and have assets across Australia, Timor-Leste, 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.

Following the implementation of the merger, three non-executive directors from Oil Search will join the Santos board. Santos’ head office will remain in Adelaide.