Australia’s oil and gas giant Santos will review any future takeover offer, but it’s confident it can hike cash flow and returns to shareholders with major upcoming projects, CEO Kevin Gallagher said on Friday, after the collapse of a $19-billion takeover bid from a consortium led by Abu Dhabi’s ADNOC.
Earlier this week, Santos said that Abu Dhabi’s energy major ADNOC had pulled an $18.7-billion bid for the Australian group as the two failed to reach an agreement on the valuation of the company and the terms of the deal.
Santos was in exclusive talks over the summer with XRG, a subsidiary of Abu Dhabi National Oil Company and lead investor of a consortium including Abu Dhabi Development Holding Company and Carlyle.
The XRG Consortium in June submitted a non-binding indicative proposal to acquire 100% of the issued shares of Santos for US$5.76 (A$8.89) per share in cash. This would mean an US$18.7 billion deal, which would have been the biggest cash transaction in Australia in recent history.
However, during the period of exclusivity, talks collapsed over differences in valuation.
“The XRG Consortium would not agree to acceptable terms which protected the value of the Potential Transaction for Santos shareholders, having regard to the likely extended timeframe to completion and the regulatory risk associated with the transaction,” Santos said on Thursday.
At a conference call on Friday, Santos CEO Gallagher said that he wants to continue leading the company for at least another 18 months
“If the shareholders decide they want rid of me, I’d respect that, and I would go, but in my conversations with our key shareholders it’s the other way around: they’re looking for me to commit and stay focused on the business, and as long as they want me here, I’m happy to stay here and stay focused on driving the business forward,” the executive said, as carried by the Australian Financial Review.
Santos is on track to launch within months the Barossa LNG project offshore Australia and the Pikka oil project in Alaska. These are set to boost Santos’ oil and gas production by 30% by 2027, and hike cash flows.
“We’re not running a sales process for the company. The reason people are looking at Santos is because we’ve got a good portfolio,” Gallagher said, referring to the collapsed offer.
By Tsvetana Paraskova for Oilprice.com
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