Two of Australia’s biggest energy producers, Santos and Oil Search, have finalised their agreement to merge into a $21 billion industry giant.
Following weeks of due diligence, the two ASX-listed companies have agreed to terms of the all-shares deal under which Oil Search shareholders would receive 0.6275 new Santos shares for each share they own.
This deal will propel the combined entity into the top 20 biggest oil and gas producers globally, with assets in Australia, Papua New Guinea, Timor-Leste, and North America.
The merger would result in Oil Search shareholders owning 38.5 per cent and Santos shareholders owning 61.5 per cent. The companies said the merger could unlock pre-tax savings of $US90-$US115m million a year.
There are still approvals needed, including from Oil Search shareholders and authorities in Papua New Guinea, where Oil Search and Santos are partners in the Exxon-led PNG LNG project.
The deal comes as oil and gas companies worldwide are being pressed to do more to combat global warming as part of the Santos-Oil Search agreement.
Oil Search chairman Rick Lee, whose board intends to unanimously recommend approval of the deal, said, “Put simply, this merger provides Oil Search shareholders with a compelling opportunity to participate in a larger entity with significant scale. The combined entity will have the capacity to deliver on an exciting pipeline of organic growth opportunities.”