Santos in talks with Oil Search for mega-merger

Australia’s second-largest IOC, Santos, is in talks with E&P player Oil Search for a possible merger, the companies announced on Tuesday.

The USD 6.5-million deal submitted on June 25, 2021, proposed a 64:37 ratio in shares for Santos and Oil Search, respectively. The proposal was denied by Oil Search but met with interest.

“Oil Search notes that, based on Friday’s closing share prices for Oil Search and Santos, the proposed terms represent a premium of only 6.8% despite Santos shareholders owning 70% more of the equity than Oil Search shareholders,” Oil Search said in its press release.

It went on to say that the company “continues to believe that the merger proposal represents an extremely attractive opportunity to deliver compelling value accretion to both Santos and Oil Search shareholders.”

Oil Search is the operator of all of Papua New Guinea’s producing oilfields. The two companies co-own PNG LNG, Papua New Guinea’s first LNG project, among other assets.