https://www.miningweekly.com

PNG court approves Santos/Oil Search deal

15th November 2021

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

Font size: - +

PERTH (miningweekly.com) – The National Court of Papua New Guinea (PNG) has approved a merger between oil and gas producers Santos and Oil Search that will create a A$21-billion oil and gas giant.

The court has called on Oil Search to convene a meeting of shareholders on December 7, to consider and vote on the proposed scheme.

The Oil Search board continues to unanimously recommend that shareholders vote in favour of the sheme, and each Oil Search director has confirmed their intent to vote all the Oil Search shares held or controlled by them in favour of the scheme, in the absence of a superior proposal.

“The merger brings together two highly complementary businesses and creates an oil and gas company of significant size with a portfolio of geographically and product diversified long-life and low-cost assets. We look forward to Oil Search’s shareholders' participation in the scheme meeting and encourage you to vote in favour of the merger, which the Oil Search directors believe is in the best interests of Oil Search shareholders,” Oil Search chairperson Rick Lee said.

Under the terms of the agreement, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held via a scheme of arrangement.

The merged entity will have a diversified portfolio of high quality, long-life, low-cost assets across Australia, Timor-Leste, PNG and North America with significant growth optionality.

The merged company will have a pro-forma market capitalisation of A$21-billion which will position the merged entity in the top-20 ASX-listed companies and the 20 largest global oil and gas companies, with a combined 2021 production of approximately 116-million barrels of oil equivalent.

The enlarged company will have a combined 2P+2C resource base of 4.9-billion barrels of oil equivalent, investment grade balance sheet with more than $5.5-billion of liquidity to self-fund development projects, whilst maintaining further optionality and flexibility to optimise the portfolio, a target gearing of less than 30%, and strong environmetnal and social governance credentials including maintaining Oil Search’s social and community investment in PNG and North America, including the Oil Search Foundation.

The merged entity would also have substantial potential combination synergies. Santos has an excellent track record of integration and recently merged Quadrant Energy and ConocoPhillips’ Western Australian and Northern Territory business unit into Santos, delivering more than $160-million in annual synergies.

The combination would also create greater alignment in PNG supporting the development of key projects including Papua liquefied natural gas, deliver new jobs and help support the local economy.

“The merger represents an attractive combination of two industry leaders to create a regional champion with the balance sheet and strong diversified cashflows necessary to fund growth, the energy transition to a lower carbon future including Santos’ leading carbon capture and storage capability, and deliver shareholder returns,” Santos chairperson Keith Spence said.

“We look forward to integrating our businesses to create one high performing team, with a vision of becoming a global leader in the energy transition.”

Edited by Creamer Media Reporter

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

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
PLUS
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?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION