Oil Search executives exit after $21bn Santos merger
A string of Oil Search’s top executives have quietly left the gas producer just weeks after its $21bn merger with Santos.
Oil Search’s top executives have quietly left the company just weeks after completing its $21bn merger with Santos amid expectations its head office in Sydney will also shut as chief executive Kevin Gallagher looks for ways to hit annual cost saving targets.
Four of Oil Search’s executive team quit Santos in January and early February after a process started to determine whether they would consider moving from their Sydney headquarters to either Santos’s Adelaide head office or its Queensland headquarters in Brisbane.
The Papua New Guinea-focused LNG producer’s acting chief executive Peter Fredricson left in January along with the company’s acting head of finance, Beth White and general counsel Michael Drew. Oil Search commercial boss Diego Fettweis had considered taking on a new role with Santos but pulled the pin and left the company last week, sources said.
Oil Search’s most senior executive in PNG, Leon Buskens, is expected to stay with Santos, while its Alaskan vice-president, Bruce Dingeman, also remains in place despite ongoing speculation the newly merged company is likely to sell off its stake in North America.
The departure of Oil Search’s top talent follows Santos outlining synergies of up to $US115m ($155m) a year as part of its sales pitch for the merger, a target widely expected to result in the closure of the PNG producer’s Sydney head office. Santos will release its annual results on February 16 and may update the market on where it expects to fund cost savings as part of its merger pitch.
Hundreds of Oil Search staff are understood to have been asked about their interest in moving to either Santos’s Adelaide or Brisbane offices but no decisions have yet been made on final numbers. Mr Gallagher conducted calls for its quarterly results in January from Oil Search’s Sydney office but there are no indications it will retain a presence in the NSW capital.
Credit Suisse said the Sydney office could be shut while also suggesting Adelaide’s Beach Energy, which will report its interim results on Monday, may look across town to find its next chief executive, after the abrupt departure of Matt Kay from the Kerry Stokes-controlled gas producer.
“We expect another reshuffle of Santos management in the wake of the merger, and struggle to see the business case for maintaining a large office in Sydney, with a reduction in the former Oil Search head office footprint to account for a large chunk of Santos‘ target merger synergies,” Credit Suisse analyst Saul Kavonic said.
“The possibility that the Beach board could look to recruit their next CEO from the ranks of the Santos executives could also provide impetus for more management changes at Santos.”
While a string of Oil Search’s top executives have now departed, Santos is expected to shake up its own executive team in the next few months as Mr Gallagher prepares the company for its next phase of growth.
The Scottish executive’s appointment to the board of iron ore and lithium producer Mineral Resources in January was slammed by a prominent investor activist, warning the move would distract him from the $21bn Oil Search integration and the need to tackle climate issues.
It also sparked speculation over how long the Santos chief would remain in the top role. He has committed to deliver its projects until 2025.
Santos in December handed the job of managing the transition to chief financial officer Anthony Neilson, who was named chief commercial officer. Anthea McKinnell succeeded Mr Nielson as Santos CFO in January.
Santos owns 61.5 per cent of the merged company to Oil Search’s 38.5 per cent.
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