Middle Eastern bid for Santos taken off the table

The whopping bid to buy an iconic Australian company with strong Territory ties has ended in acrimony. Read what happened.

Chill - Santos oil and gas feature. An LNG export ship at the Darwin LNG plant. FOR CHILL USE ONLY.

The Middle Eastern takeover bid for Aussie oil and gas giant Santos has ended acrimoniously, with the consortium withdrawing its $36 billion offer overnight.

The United Arab Emirates-government backed XRG-led consortium said while it still “maintains a positive view” of the Santos business, a “combination of factors” had impacted its “assessment of its indicative offer”.

Santos employs hundreds of people in the Northern Territory at its Darwin LNG facility, with the plant about to return to service as part of Santos’ Barossa gas development. The company is also a joint venture partner in the Beetaloo Basin development.

“Following a comprehensive evaluation, and taking into account all commercial factors and the terms of the Scheme Implementation Agreement required by the Santos Board, the consortium has determined that it will not be proceeding with the proposed transaction,” the XRG statement said.

Santos is a joint venture partner in the Beetaloo Basin.

“While disappointed not to move forward, XRG, and its Consortium partners, are responsible, disciplined investors with a clear focus on creating value for our shareholders and driving long-term growth.

“The consortium extends its appreciation to the Santos management team for their assistance in the process, as well as all levels of government and other stakeholders for their positive and constructive engagement. This reinforced our confidence in Australia’s energy and investment environment, as well as the other locations that Santos operates.

“The Consortium was prepared to undertake new long-term commitments to Australian energy production that would deliver meaningful benefits to domestic gas consumers and enhance regional energy security.”

Satos chairman Keith Spence. Picture: NCA NewsWire / RoyVphotography

The statement said the company was still pursuing acquisition opportunities.

Santos said it would continue to focus on its two main development projects, the Northern Territory-based Barossa gas project and the Pikka oil project located on Alaska’s North Slope, which has the company “well-positioned” to post a 30 per cent increase in production by 2027.

Santos chair Keith Spence was critical of XRG’s approach, saying it would not agree to an appropriate allocation of risk between the consortium and Santos shareholders.

He said the Santos board had expressed concern to the XRG consortium about delays agreeing to the Scheme Implementation Agreement.

“Over the past decade, our disciplined low-cost operating model has driven production costs down, strengthened the portfolio, and delivered strong free cash flow and returns for shareholders,” Mr Spence said.

“With production set to rise as Barossa and Pikka phase 1 come online, and unit production cost expected to trend lower over time, our strategy is clear - generate cash, reward shareholders, reinvest to backfill and sustain our infrastructure, and build and grow our production, while continuing to operate safely and reliably.

“Santos has a clear strategy, strong leadership and high-quality growth opportunities across our global portfolio. The Board is confident these strengths will deliver long-term value for shareholders,”