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Santos announced the non-binding indicative proposal from the XRG consortium, which includes Abu Dhabi Development Holding Company (ADQ) and US-based investment firm Carlyle, in a statement on Monday.
Moreover, the proposal is for the acquisition of all of the ordinary shares on issue in Santos for a cash offer price of $5.76 per Santos share via a scheme of arrangement.
This is a 28 percent premium to the last closing share price.
Santos said the indicative proposal is expressed as a “final non-binding indicative offer.”
It follows two confidential, non-binding and indicative proposals from the XRG consortium to acquire 100 percent of Santos Shares on March 21 for $5.04 in cash per share and on March 28 for $5.42 in cash per share.
The proposal remains subject to the satisfactory completion of confirmatory due diligence by the XRG consortium and the negotiation and execution of an agreed scheme implementation agreement (SIA) with Santos on customary terms and conditions.
Santos said implementation of the scheme under the SIA would be conditional on customary approval from the Foreign Investment Review Board, Australian Securities and Investments Commission, National Offshore Petroleum Titles Administrator, PNG Securities Commission, PNG Independent Consumer and Competition Commission, and Committee on Foreign Investment in the US.
The Santos board has “determined that it is in the best interests of Santos shareholders to provide the XRG consortium with access to confidential information to conduct confirmatory due diligence and negotiate the terms and conditions of an SIA,” it said.
Last year, Santos and its compatriot, Woodside, ceased talks regarding a potential merger, which would have created a merged energy and LNG giant.
In 2021, Santos completed its merger deal with PNG-focused Oil Search.
With this move, Santos increased its stake in the PNG LNG project.
The company operates the Gladstone LNG plant and the Darwin LNG plant.
The Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is more than 95.2 percent complete and remains on target for first production in the third quarter of 2025.
Adnoc in LNG expansion
XRG said in a separate statement that the proposed transaction is “aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business.”
The firm stated that the consortium aims to maintain Santos’ headquarters in Adelaide, its brand, and operational footprint in Australia, as well as key international operating hubs.
In November 2024, UAE’s energy giant Adnoc formed XRG, with an enterprise value of over $80 billion, to invest in gas and LNG, chemicals, and low-carbon energies.
XRG recently said it plans to build a top five integrated global gas and LNG business.
“The board directed XRG to build a top five integrated global gas and liquefied natural gas (LNG) business, targeting 20–25 million tons per annum of capacity by 2035 and supported the assessment of potential upstream gas M&A and LNG opportunities to strengthen its North American gas position,” the firm said.
XRG said this follows recent acquisitions and partnerships in the United States (Rio Grande LNG), Mozambique (Area 4 Rovuma basin), Egypt (Arcius Energy), Azerbaijan (Absheron), as well as Turkmenistan (Offshore Block I).
Earlier this year, XRG completed the purchase of Galp’s 10 percent interest in the Area 4 concession of the Rovuma basin in Mozambique, which includes Eni’s Coral South FLNG project.
The acquisition will entitle it to a share of the LNG production from the concession, which has a combined production capacity exceeding 25 mtpa.
Moreover, Adnoc last year purchased an 11.7 percent stake in the first phase of NextDecade’s Rio Grande LNG export terminal in Texas from Global Infrastructure Partners.
Adnoc and NextDecade also entered into a 20-year LNG offtake agreement for the fourth Rio Grande LNG train.
The deal remains subject to a final investment decision (FID).
Adnoc is investing heavily in its LNG business.
In June 2024, it made the final investment decision to build its LNG export terminal in UAE’s Al Ruwais.
The LNG project will consist of two 4.8 mtpa trains with a total capacity of 9.6 mtpa, more than doubling Adnoc’s existing UAE LNG production capacity to around 15 mtpa.
Adnoc currently owns a 70 percent stake in Adnoc LNG, which produces about 6 mtpa of LNG from its facilities on Das Island.
