Energy|Gas|LNG|Oil And Gas|Oil-and-gas|PROJECT|Projects|Proximity
Energy|Gas|LNG|Oil And Gas|Oil-and-gas|PROJECT|Projects|Proximity

Woodside, Santos scrap talks on A$80bn merger

7th February 2024

By: Reuters


Font size: - +

Australia's Woodside Energy and Santos said on Wednesday they had ended talks to create a possible A$80-billionglobal oil and gas giant, and Santos flagged it would look for other ways to bolster its value.

Woodside, which is more than twice as large as Santos by revenue and market capitalisation, said it would only pursue a deal that would clearly benefit its shareholders.

Santos shares fell nearly 9% after the announcement and closed down 5.8% while Woodside's stock ended up 0.5%.

The talks, first announced in December, fell apart as the two companies could not agree on a valuation level, according to two sources with direct knowledge of the matter who could not be named discussing confidential information.

A firm bid did not emerge from Woodside following the almost two months of due diligence and negotiations that the parties undertook, one of the sources said.

Woodside declined to comment on those points and Santos did not immediately respond to a request for comment.

Santos said in a statement that after "an initial exchange of information, sufficient combination benefits were not identified to support a merger that would be in the best interests of Santos shareholders".

If the merger had taken place, it would have created a major global liquefied natural gas (LNG) producer that could attract more offshore investors as gas is seen as a key bridging fuel in the shift to cleaner energy.

"While the discussions with Santos did not result in a transaction, Woodside considers that the global LNG sector provides significant potential for value creation," Woodside CEO Meg O’Neill said in a statement.

Woodside had faced pressure from some investors not to pay a premium for Santos in what would have been one of the largest corporate takeovers in Australian history.

"Woodside's decision to walk away is a relief," said Simon Mawhinney, chief investment officer at Allan Gray which holds about A$700-million worth of Woodside stock. The fund last week wrote to management warning against pursuing a deal.

"We had hoped this would be the outcome," Mawhinney said. "It was unclear to us where there was much merit in a tie up."

For Woodside, this is the second time in just over eight years that it has ditched a deal that would have given it gas assets in Papua New Guinea, prized for their low production costs and proximity to big LNG buyers in north Asia.


Santos, which has long underperformed the wider energy sector, said on Wednesday it would continue a months-long review into ways to unlock value for shareholders.

Analysts and investors said Santos could try to sell all or part of its 51% share of the Pikka oil project in Alaska.

Doing so would free up cash for new projects and reduce exposure to an asset of questionable value, said Mawhinney.

Shoring up Santos' share price last month, an Australian court removed a major legal hurdle to its $4.3-billion Barossa gas project off the country's northwest coast.

The focus now turns to whether Santos can deliver on the promise of projects like Barossa or Pikka, said Neil Beveridge, an analyst at Bernstein Research.

"With Barossa approval, there will be increased confidence in their ability to execute the growth strategy ... But while there is long term upside, execution remains a key risk with projects in Alaska, PNG and Australia," he said.

Edited by Reuters



SBS Tanks
SBS Tanks

SBS® Tanks is a leading provider of innovative water security solutions with offices in Southern Africa, East and West Africa, the USA and an...

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...


Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (12/04/2024)
12th April 2024 By: Martin Creamer
Magazine round up | 12 April 2024
Magazine round up | 12 April 2024
12th April 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?







sq:0.064 0.113s - 158pq - 2rq
Subscribe Now