The merger of Australia’s Santos (ASX:STO) and Papua New Guinea-focused Oil Search is now complete following shareholder approvals and the blessings of PNG.
The deal gives Santos a much more powerful position in PNG’s petroleum industry – a 42.5% stake in in the flagship PNG LNG project, operated by ExxonMobil (NYSE:XOM), a 22.8% stake in the proposed Papua LNG project, operated by TotalEnergies (LON:TTE), and a leading position in Highlands gas fields, including a 51.2% stake in the P’nyang field that was previously targeted to underpin a third train at PNG LNG. A sell-down of about 10% of PNG LNG is considered likely by analysts, reported Australian consultancy Energy Quest.
The merger creates a regional champion of size and scale, with a market capitalisation of about A$22 billion (US$15.7 billion), Santos said today.
“The merged company would have pro-forma 2021 production of approximately 117 million barrels of oil equivalent (mmboe) and pro-forma 2P+2C resource base of 4,867 mmboe,” added Santos.
Santos expects the merger to unlock pre-tax synergies of US$90-115 million per year.
Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held on the record date of 14 December 2021.
Santos Chairman Keith Spence said: “The merger combines two industry leaders to create a regional champion of quality, size and scale with a unique and diversified portfolio of long-life, low-cost oil and gas assets.
“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,” Spence said.