Woodside and Santos multi-billion merger talks come to naught

Two Australian energy giants – Woodside and Santos – have put an end to their discussions concerning an A$85.7 billion (about $55.9 billion) merger, which had the potential to bring additional growth opportunities and establish an Australian gas market giant.

The two players confirmed the preliminary talks in December 2023 without offering any additional information at the time. These deliberations have now fallen through, however, the reasons why the duo did not come to an understanding regarding the merger are unclear, as this information remains undisclosed. Currently, Woodside is worth around A$61.63 billion while Santos is valued at A$24.07 billion.

Meg O’Neill, Woodside CEO, commented: “We continue to be disciplined in our approach to mergers and acquisitions and capital management to create and deliver value for shareholders. While the discussions with Santos did not result in a transaction, Woodside considers that the global LNG sector provides significant potential for value creation.”

“Woodside’s world-class global portfolio, growth pipeline and strong balance sheet underpin our attractive investment proposition for Australian and global investors.”

According to Woodside, the discussions regarding a potential merger with Santos have ceased, but the Australian energy giant plans to keep on continuously assessing a range of “organic and inorganic” growth opportunities. The company is bent on pursuing only those transactions that are accretive for its shareholders.

“Following an initial exchange of information, sufficient combination benefits were not identified to support a merger that would be in the best interests of Santos shareholders. Santos has a clear strategy to deliver long-term shareholder value. We have a strong balance sheet and continue to review options to unlock value for shareholders,” outlined Santos.

Both Woodside and Santos have previously completed mergers with other oil and gas companies. Most recently, Woodside completed the merger with BHP’s oil and gas portfolio while Santos acquired Oil Search.

The Australian government has set the wheels into motion to come to grips with a brewing cauldron of uncertainty surrounding the offshore regulatory approvals system, emphasizing the need for clear regulations to enable the country’s economic and energy security.

One of the main pillars to tackle this will be the government’s new gas strategy. Woodside is one of the contributors to this strategy. The Australian giant recently started drilling the first well in an eight-well campaign at a gas field off Australia with one of Valaris’ semi-submersible rigs.