Santos Enters Next Phase of Oil Search Merger

by PNG Business News - August 23, 2021

Photo Credit: Santos

According to an official, Santos Ltd will stay disciplined and cost-conscious as it enters its next phase of expansion and progresses with the proposed merger with Oil Search Ltd.

Despite lower average LNG prices, Santos managing director and chief executive officer Kevin Gallagher said this following a half-year report of a free cash flow of US$572 million (approximately K2 billion).

“The proposed merger is a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets,” he said.

“The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns.”

The combination, according to Gallagher, would strengthen their industry-leading commitment to environmental, social, and corporate governance.

This is accomplished by combining Santos' net-zero 2040 strategy, which includes industry-leading carbon capture and storage projects, with Oil Search's distinctive social programs in PNG, all of which are backed by a solid balance sheet to support the transition to a lower-carbon future.

“I am pleased with the progress we are making on due diligence and look forward to the signing of a binding merger implementation deed in the coming weeks,” Gallagher said.

Meanwhile, the half-year results included a record production of 47.3 mmboe (million barrels of oil equivalent), record sales volumes of 53.8 mmboe and an underlying profit of US$317 million (about K1.1 billion).

“These results again demonstrate the resilience of our cash-generative base business and strong operational performance across our diversified asset portfolio,” he said.

“Consistent application of our low-cost disciplined operating model continues to deliver cost reductions and efficiencies despite cost challenges across the industry and the Coronavirus (Covid-19)-related cost impacts in the base business.”

 

Reference:

The National (18 August 2021). “Firm Enters Next Phase In Merger”.



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