Firm enters next phase in merger


SANTOS Ltd will remain disciplined and cost-focused as it enters its next phase of growth and progress in the proposed merger with Oil Search Ltd, according to an official.
Santos managing director and chief executive officer Kevin Gallagher said this following a half year announcement of a free cash flow of US$572 million (about K2 billion), despite lower average LNG prices.
“The proposed merger is a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets,” he said.
“The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns.”
Gallagher said the merger would also build on their industry-leading approach to environmental, social and corporate governance.
This is through the combination of Santos’ net-zero 2040 pathway, including its sector-leading carbon capture and storage projects, and Oil Search’s unique social programmes in PNG, underpinned by a strong balance sheet to fund the transition to a lower-carbon future.
“I am pleased with the progress we are making on due diligence and look forward to the signing of a binding merger implementation deed in the coming weeks,” Gallagher said.
Meanwhile, the half-year results included a record production of 47.3 mmboe (million barrels of oil equivalent), record sales volumes of 53.8 mmboe and underlying profit of US$317 million (about K1.1 billion).
“These results again demonstrate the resilience of our cash-generative base business and strong operational performance across our diversified asset portfolio,” he said.
“Consistent application of our low-cost disciplined operating model continues to deliver cost reductions and efficiencies despite cost challenges across the industry and the Coronavirus (Covid-19)-related cost impacts in the base business.”