Santos offers XRG more time on bid as it insists progress has been made
Santos has granted its Middle Eastern suitors an extension to finalise their $30bn takeover bid as CEO Kevin Gallagher moved to ease market concerns about the deal.
Santos has agreed to give the Middle Eastern-backed consortium pursuing a $30bn takeover additional time to finalise its proposal.
At the same time, in an effort to calm investor nerves, Santos emphasised that substantial progress has been made in negotiations.
The Adelaide-based oil and gas company on Monday confirmed it had granted the Abu Dhabi state-owned oil and gas entity ADNOC and its private equity partner The Carlyle Group, collectively known as XRG, a further extension until September 19 to complete due diligence and secure the necessary internal approvals.
The move follows the consortium’s request last week for more time — a development that caught Santos off guard by introducing an approval process the company had not previously accounted for. The delay had prompted concerns that the ambitious bid for one of Australia’s largest energy companies could be faltering.
Market sentiment, however, appeared to improve after Santos chief executive Kevin Gallagher stressed that the extension reflected progress in securing a binding deal. Mr Gallagher said the agreement includes unspecified shareholder protections and that ADNOC had reaffirmed there were no major issues identified in the due diligence process.
“As part of the discussions we’ve had with them, they’ve provided some colour on those approvals,” Mr Gallagher told analysts. “But again, we don’t want to comment publicly on XRG’s internal processes. That’s a matter for XRG, but we’re pleased with the progress we’ve made.”
The comments helped steady Santos shares, which had fallen nearly 5 per cent following the initial news of ADNOC’s extended internal approvals. The stock recovered modestly on Monday, closing up 0.6 per cent at $7.81, a rebound notable given the company had also posted a 22 per cent drop in half-year profits.
Santos said net profit, excluding one-off items, fell to US$508m ($790.4m) in the six months ended June 30, down from US$654m a year earlier. Analysts had forecast stronger results, but weaker gas prices had weighed on the result.
Despite Mr Gallagher’s reassurance, the takeover remains far from guaranteed. While the deal has garnered support from many major shareholders, it is subject to scrutiny under the Foreign Acquisitions and Takeovers Act, which allows Treasurer Jim Chalmers to block or impose conditions on foreign investment deemed contrary to Australia’s national interest.
Those powers could include ordering divestments of certain assets — a scenario attracting close attention from other players in the domestic gas market, including Beach Energy. Beach has openly expressed interest in acquiring additional Australian gas assets, and its chairman Ryan Stokes has publicly questioned whether the ADNOC deal aligns with national interests. Analysts suggest such commentary may be a strategic play to influence regulatory conditions, particularly if the Treasurer required ADNOC to divest Santos’ domestic portfolio as part of any approval.
The extended timeline granted to XRG reflects both the complexity of the transaction and the highly regulated environment in which Australian energy assets operate. Santos’ international portfolio, which spans Papua New Guinea, Timor-Leste and the US, adds layers of commercial and operational due diligence that the consortium must satisfy before a binding scheme can be signed.
Investors are now closely watching whether the extension will be sufficient for XRG to finalise approvals and satisfy Australian regulators, or if the process will introduce further delays and uncertainty. For Santos, the outcome of the bid carries major strategic implications at a time when global LNG demand remains volatile, and domestic political scrutiny of foreign investment is intensifying.
Shareholders in Santos have been venting increasing frustration with the company as it struggles to replicate the success of fellow Australian company, Woodside. Santos insists it is primed to see a lift in its value as major projects come to fruition, and the company on Monday said it will bring oil from its project in Alaska earlier than previously announced.
Santos insists the two projects will increase production and lower capital expenditure to allow it to return more cash to shareholders, but critics insist the company will need to commit large amounts of capital for new projects from 2030.
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