Papua New Guinea-focused Oil Search and Australia’s Santos have entered into a definitive merger deal that would create an LNG player worth about A$21 billion ($15.5 billion).
Under the revised offer, Oil Search shareholders would receive 0.6275 new Santos shares.
Following the completion of the scheme, Oil Search shareholders would own about 38.5 percent of the merged group and Santos shareholders would own 61.5 percent.
This deal values Oil Search at about A$8 billion ($6 billion). The firm has a stake in the ExxonMobil-led PNG LNG project but also the planned Papua LNG development.
Santos said on Monday it expects the merger to unlock pre-tax synergies of $90-115 million per annum.
The merger is subject to a limited number of customary conditions including Oil Search shareholder approval, regulatory approvals and Papua New Guinea court approval.
Moreover, the combined Santos and Oil Search will be led by Santos chief executive Kevin Gallagher.
“Santos and Oil Search will be stronger together and will have increased scale and capacity to drive a combined disciplined, low-cost operating model and unrivaled growth opportunities over the next decade,” Gallagher said.
“The merger will create a company with a balance sheet and strong cashflows necessary to successfully navigate the transition to a lower carbon future with the combination of Santos’ leading CCS capability combining with Oil Search’s ESG programs in PNG and Alaska to provide a strong foundation,” he said.