The proposed merger between Santos and Oil Search is closer to reality after receiving approval from Papua New Guinea’s (PNG) Securities Commission. In the same week, over 95% of Oil Search shareholders voted in favour of the merger, despite opposition from some long-standing investors in the company.
Santos’ proposed AUD8.8bn ($6.2bn) takeover of Oil Search would make Santos the largest shareholder in the PNG LNG scheme – PNG’s largest resource project – and therefore requires approval from the country. A further approval is still required from the National Court of Justice of PNG, where a hearing is scheduled for December 9.
If the court approves the merger, it will become legally effective as of December 10, with implementation expected around a week later.
As well as PNG, the combined company would have operations in Australia, Timor-Leste and North America. It will have a resource base of 4.9bn barrels of oil equivalent and production of around 116mn boe in 2021. The combined company’s market capitalisation will be roughly AUD21bn ($15bn), which Santos says would make it one of the 20 largest oil and gas companies in the world.
A small number of Oil Search shareholders oppose the merger because they say it undervalues the company’s assets, but this was not enough to stop the vast majority from backing the deal.

 

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