Santos (ASX:STO) and Oil Search finalise $21bn merger

Company News

by Lauren Evans

Energy giants Santos (ASX:STO) and Oil Search (ASX:OSH) have finalised their $21 billion merger, after ongoing talk. 

Santos notes the merger will create a 'regional champion of scale with a diversified portfolio of long-life and low-cost oil and gas assets'.

Oil Search shareholders are to receive 0.6275 Santos shares for each Oil Search share held. This will then make Oil Search shareholders own around 38.5 per cent of the merged entity, while Santos shareholders will own around 61.5 per cent.

Santos expects the merger to unlock pre-tax synergies of US $90-115 million per annum, excluding integration and other one-off costs.

The merger is subject to Oil Search shareholder approval, regulatory approval and Papua New Guinea court approval.

"This merger provides Oil Search shareholders with a compelling opportunity to participate in a larger entity with significant scale, product mix, ESG and geographic diversity, and access to capital. "The combined entity will have the capacity to deliver on an exciting pipeline of organic growth opportunities,” said Oil Search chairman Rick Lee. 

“The merged entity will be well positioned for success in the new era of oil and gas, with strong cashflow generation from a diverse range of assets providing a platform to self-fund growth and deliver shareholder returns," commented Santos chairman Keith Spence. 

Shares in Santos (ASX:STO) and Oil Search (ASX:OSH) are in a trading halt.  

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