Oil Search, Santos start process for possible merger

The National Business

OIL Search and Santos have commenced a due diligence process on the revised proposal agreed to by the two companies for a possible merger.
Oil Search, in a company announcement, said the due diligence process would take four weeks.
The two companies agreed last Monday to a revised merger proposal put forward by Santos to acquire shares in Oil Search.
The deal is worth AU$21 billion (about K52.87 billion).
Under the revised proposal, Oil Search shareholders would own 38.5 per cent of the merged group and Santos shareholders would own 61.5 per cent.
Oil Search and Santos have agreed to confidentiality arrangements and commenced a mutual due diligence process, which is expected to take approximately four weeks.
That mutual due diligence will be on an exclusive basis during that period.
“As noted in August, 2021, subject to each party completing due diligence on the other to its satisfaction, and the entry into of a merger implementation agreement, the Oil Search board intends to unanimously recommend shareholders vote in favour of the revised proposal, in the absence of a superior proposal and subject to the conclusion of an independent expert that the revised proposal is in the best interests of Oil Search shareholders,” Oil Search said.
The Oil Search board is expected to update shareholders and the market in due course.
The company said its shareholders did not need to take any action in relation to the revised proposal at this stage.
“There is no certainty that the revised proposal will result in a transaction.”
Meanwhile, Santos managing director and chief executive officer Kevin Gallagher previously said the potential merger of Santos and Oil Search was consistent with Santos’ disciplined strategy to grow around our core assets.
The merger of Santos and Oil Search will create features which include:

  • DIVERSIFIED portfolio of high quality, long-life, low-cost assets across Australia, Timor-Leste, Papua New Guinea and North America with significant growth optionality;
  • PRO-FORMA market capitalisation of AU$21 billion (about K52.87 billion) which would position the merged entity in the top-20 ASX-listed companies and the 20 largest global oil and gas companies;
  • COMBINED 2021 production of approximately 116 million barrels of oil equivalent;
  • COMBINED 2P+2C resource base of 4,983 million barrels of oil equivalent; and,
  • INVESTMENT grade balance sheet with more than US$5.5 billion (K18.86 billion) of liquidity to self-fund development projects, whilst maintaining further optionality and flexibility to optimise the portfolio.