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http://www.smh.com.au/business/markets-live/markets-live-bottom-of-the-barrel-20160112-gm4lpo.html

As M&A deals go, this would be a big one, but Credit Suisse is pointing to the logic between a mega-merger between Santos and Origin Energy to drive $3 billion of cost synergies and help the companies weather rock-bottom oil prices.
The deal as envisaged by the bank's energy equities team would involve the spin-off of Origin's utilities business, while the oil and gas operations of the two would be combined to create "Soritos E&P".
"We are struck by the beauty of both the industrial and political logic to the deal at a time when the companies are on their knees and the east coast market is staring down the barrel of an uncomfortable date with destiny," the analysts said in a note to clients.
A zero-premium merger of the two would be the most logical structure for the two companies, which are both suffering from the impact of funding large liquefied natural gas projects in Queensland at a time when cash flows are being hit by plunging crude oil prices, they said.
"A more open mindset to a merger could see huge synergies realised at a time when, particularly at the LNG projects, political and industrial logic is compelling to get a deal done," the analysts led by Mark Samter said in the report.
The main driver for such a deal is the combination of the two Queensland LNG projects, which would open the way for one of the four LNG production units to be mothballed, Credit Suisse said.
That would help the contracted LNG buyers who don't want to take all the gas they have committed to, as well as domestic gas buyers on the east coast, which are struggling to source long-term supplies.

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