Kevin Gallagher in line for bumper payday on Santos deal

Kevin Gallagher is eyeing a bumper payday that most people could only dream of, if a $30bn Santos takeover deal wins the green light.

Santos managing director Kevin Gallagher. Picture: Brenton Edwards

• Analysis: Takeover will gut SA corporate giant

Santos boss Kevin Gallagher is in line for a bumper $50m-plus payday if the near $30bn takeover deal for the oil and gas giant wins the green light – a milestone that would bring to an end 10 tumultuous years at the top of South Australia’s biggest company.

If the deal goes through, the affable Scot will be remembered in Adelaide as the man who turned around the fortunes of the state’s last remaining corporate heavyweight.

And he’ll ride off into the sunset with a handsome farewell gift.

According to company filings, the Santos boss holds around 2.2 million shares via his family trust, worth around $19.3m at the offer price lobbed by a consortium led by the state-owned Abu Dhabi National Oil Company (ADNOC).

Together with share acquisition rights, ‘restricted’ shares and the so-called golden handcuffs incentive handed out by the Santos board in 2021 to stop him throwing his name in the mix for the chief executive role at rival Woodside Energy, Mr Gallagher’s could earn more than $50m from the deal at the current offer price.

Santos managing director Kevin Gallagher. Picture: Supplied

The long-serving oil and gas boss had been expected to step down once the $6m golden handcuff deal expires at the end of 2025, but with the ADNOC takeover bid expected to take more than six months to secure regulatory and shareholder approvals, his tenure is likely to drag into 2026.

That would be 10 years since he took on the top job amid a slump in oil prices and a share price languishing at near record lows.

The Santos share price has risen from $3.41 since Mr Gallagher started in February 2016, when he immediately started whipping the company into shape with a series of cost cutting and debt reduction measures.

Never afraid to speak out as an advocate for the oil and gas industry, more recently he has successfully secured key approvals for the controversial $5.8bn Barossa project in the Timor Sea and Narrabri gas development in north-western NSW, despite environmental challenges and legal hurdles from Indigenous groups, while at the same time committing Santos to a net zero goal by 2040 and pioneering emerging technologies like carbon capture and storage at Moomba.

Saul Kavonic, an energy analyst at MST Financial, described Mr Gallagher’s tenure as a tale of two halves.

“He really turned around Santos from a near death situation, where there was a severe need to cut costs, stabilise the business, right the ship, which he’s very successfully delivered on in the first few years of his tenure,” he said.

“But then the second half of the tenure is where you saw a lack of delivery after a period of over promising, underwhelming share price performance and the business really struggled to deliver on market expectations.

“But if you just look at how Santos has changed over the last 10 years from a near-death experience towards a truly regional player, with much bigger interests in the Northern Territory, Western Australia and Papua New Guinea – it is a transformed company.

“There’s certainly been some trade offs and pains along the way, but compared to when Kevin joined the company it is in a much better place today.”

Opposition energy spokesman Stephen Patterson said on Tuesday that any takeover deal “must guarantee local jobs, protect the Adelaide headquarters, and ensure ongoing investment in our state’s energy sector”.

“This is a $30bn deal with profound consequences for South Australia’s economy, energy resilience, and investment reputation,” he said.

“The Labor Government must work collaboratively with the Liberal Opposition to ensure bipartisan protection of our strategic assets.

“Over time the effect of South Australia losing company head offices has seen talented and highly skilled professionals relocate, putting further importance on the retention of Santos head office in Adelaide.”

KEVIN GALLAGHER’S 10 YEARS AT THE TOP

Turnaround: Gallagher took the helm in February 2016 when Santos was facing significant financial challenges with high debt levels and low oil prices. He implemented a successful turnaround strategy focused on cost reduction and operational efficiency.

Oil Search merger: Orchestrated the $21bn merger with Oil Search in 2021, which significantly expanded Santos’s portfolio and created one of the largest oil and gas companies in the Asia-Pacific region.

PNG LNG expansion: Through the Oil Search acquisition, strengthened Santos’s position in the Papua New Guinea LNG project, one of the company’s most profitable assets.

Takeover target: In 2018, Santos fended off a $7 a share takeover bid from US company Harbour Energy.

Merger talks: Santos ended talks with larger rival Woodside over a an $80m merger proposal in early 2024, with the companies unable to agree on a valuation.

Barossa Gas Project: Advanced the $3.6bn Barossa offshore gas project in the Timor Sea, despite environmental challenges and legal hurdles from Indigenous groups.

Narrabri Gas Project: Advanced the controversial Narrabri Gas Project in NSW, securing key regulatory approvals despite significant environmental opposition.

Carbon capture: Committed Santos to carbon capture and storage projects, including at Moomba in South Australia, as part of the company’s climate strategy.

Dorado oil discovery: Oversaw the development of the significant Dorado oil discovery off Western Australia’s coast, one of the largest Australian oil discoveries in decades.

Share price recovery: Led a significant recovery in Santos’s share price from historic lows when he took over.

Net zero: Announced Santos’s commitment to achieve net zero emissions by 2040, positioning the company for the energy transition while maintaining focus on natural gas.