Woodside Santos merger, page-14

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Lawchanges sparks more gas industry deal talk

Sources say they believe the change by the WA government could involve a repeal of the export ban for onshore gas exploration.

• By BRIDGET CARTER

DATAROOMEDITOR

@BridgetCarterb

• 6:05PM DECEMBER 7, 2023
• 4 COMMENTS

Oil and gas deal operatives areanticipating a significant change in the Western Australia gas policy in thedays before Christmas, in a move which some believe could trigger a fresh roundof mergers and acquisitions.

It comes as Santos and Woodsideremain in talks about a merger.

Speculation had been mountingabout sector corporate activty, as reported by DataRoom on November 30.

Sources say they believe thechange by the state government could involve a repeal of the export ban foronshore gas exploration.

It could mean groups operatingin the Perth Basin are keenly sought after, companies such as Strike Energy orthe Kerry Stokes-backed Beach Energy, with Gina Rinehart’s Hancock prospectinga potential consolidator.

The state government placed aban on exports in recent months in a bid to keep enough supplies for domesticuse.

The Chris Ellison-backed MineralResources has been lobbying for a move to changes over the state’s domestic gasreservation policy to develop the Perth Basin, as have Hancock and Beach.

Beach Energy secured anexemption to the rule and can sell gas from its Waitsia project in the onshorePerth Basin.

The policy bans exports fromonshore projects and requires big offshore players to place 15 per cent oftheir gas into the local market.

While changes are afoot to thepolicy by the WA government, sources say that uncertainty surrounding the gaspolicy on the country’s east coast has so far deterred suitors from a play forSantos, as has the fact it is yet to obtain approvals for its Barossa gasproject in the Northern Territory and its price expectations.

Some had suspected that a majorglobal energy giant like ConocoPhillips or Chevron could make a play forWoodside or Santos, while another possibility is a merger between thepair.Investment bankers working in both the Woodside and Santos camps have heldtalks about a tie-up.

The top brass at Santos areknown to be frustrated with the share price, taking the view it is worth aboutdouble the $6-$7 it is trading at, while some believe the Woodside scrip isexpensive.

Santos is trading at about ninetimes its earnings and Woodside 12 times.

While Santos shareholders arebelieved to be keen on a deal, Woodside is unlikely to be keen to pay a bigprice for Santos and its focus is more offshore when it comes to mergers andacquisitions after buying the BHP petroleum assets, which have strengthened itspresence in the Australia market.

BRIDGET CARTER

DATAROOM EDITOR

BridgetCarter has worked as a writer and editor for The Australian’s DataRoom columnsince it was launched in 2013, focusing on capital markets, mergers andacquisitions, private equity and investment banking. S... Read more

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