Oil Search’s board, headed by Rick Lee, is coming under intense pressure to engage with suitor Santos on a potential $23 billion merger after the Papua New Guinean company revealed it had knocked back a proposal to create a “regional champion” in oil and gas.

The embattled target underlined its willingness to engage on “fair” takeover transactions but said the terms of Santos’s all-scrip merger proposal, which offered a 6.8 per cent premium, “were demonstrably not”.