Santos Has Proposal to Acquire Oil Search Rejected
Deal would have brought together two Australia-listed companies to create $16 billion energy producer Santos has been an active buyer of energy assets in recent years.
Photo: jason reed/Reuters
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July 19, 2021 9:03 pm ET
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SYDNEY— Santos Ltd. said it approached Oil Search Ltd. about a possible merger last month, but its proposal to create an energy company with a market value of 22 billion Australian dollars, equivalent to $16.1 billion, was rejected.
Santos said it is still seeking to engage Oil Search about the merits of a deal, which would represent a doubling down on production of oil and natural gas even as some rivals seek to transition away from fossil fuels.
Santos’s proposal illustrates how a recovery in prices of oil and natural gas as economic activity picks up pace amid the rollout of Covid-19 vaccines globally is restoring cash flows for energy companies and emboldening them to pursue deals.
Oil Search is Papua New Guinea’s largest oil producer and owns a minority stake in the Exxon Mobil Corp. -operated PNG LNG gas-export project in the country, which also counts Santos as an investor. Oil Search owns undeveloped oil reserves in Alaska that it hopes to develop if it can bring in another investor.
Santos said it offered 0.589 of its own shares in exchange for each Oil Search share on issue. A deal would have led to Santos shareholders owning 63% of the combined company, with Oil Search investors holding the remaining stock.
OSH Price at posting:
$4.04 Sentiment: Buy Disclosure: Held
