Woodside, Santos confirm discussions are ongoing surrounding possible merger

Woodside, Santos confirm discussions are ongoing surrounding possible merger
  • PublishedDecember 8, 2023

Woodside has released a statement to the Australian Stock Exchange in response to media speculation, saying discussions remain confidential and incomplete, and there is no certainty that they’ll lead to a transaction.

Woodside’s statement said the company continuously assesses a range of opportunities to deliver value for shareholders, and will continue to update the market.

Santos also released a statement, confirming it had started “preliminary discussions”.

“Santos continuously reviews opportunities to create and deliver value for shareholders,” the statement said.

Top of Santos building in Brisbane's CBD at sunset.
Santos is a global energy player with its headquarters in Adelaide. (ABC News: Chris Gillette)

“Concurrently, Santos is assessing a range of alternative structural options with a view to unlocking value as referred to on Santos’ investor day on 22 November 2023.”

However Santos did say “any consideration of any merger is at an early stage and there is no agreement between the parties”, adding there was “no certainty any transaction will eventuate from these discussions”.

A merger would create an oil and gas behemoth with a combined market capitalisation of about $80 billion.

While headquartered in Perth, Woodside is a major player in the global energy market and operates the North West Shelf and Pluto gas projects in the Pilbara. 

The company has faced intense resistance from environmentalists and traditional owners over its massive Scarborough gas project.

Santos is also a global energy company with operations spanning Australia, Papua New Guinea, Timor-Leste and the United States.

Woodside shares closed Thursday at $29.97, while Santos shares were valued at $6.83.

‘Get big or get out’

Independent corporate analyst Peter Strachan says the merger talks makes sense for both companies.

“There’s the opportunity to get big or get out,” he said.

“The two companies are very major producers of liquified natural gas globally, and that’s a game where you need to have scale to ensure security of supply, and also to drive costs down.

“It would be an interesting clash of who’s going to do what, I think there are some pretty big egos in this industry, and you’re going to see a rationalisation.

“Obviously one of the benefits of doing a project like this is you only need one chief executive, you only need one chief financial officer, you only need a certain cohort of people in your legal contracts team.

“At the top there’d be a pairing down of people because they would be duplicating responsibilities in many areas, so those are the sorts of efficiencies that can be drawn out.”

Mr Strachan said big decisions would need to be made at the very top, particularly regarding the chief executive role, currently filled by Meg O’Neill at Woodside, and Kevin Gallagher at Santos.

Kevin Gallagher wears a suit at a press conference in Darwin.
Kevin Gallagher is the chief executive of Santos. (ABC News: Roxanne Fitzgerald)

“The first thing I thought of was who’s going to run it?” he said.

“Gallagher was actually touted as a replacement when Woodside changed its chief executive several years ago, so it may well be that he ends up in the top job in Perth, rather than the current incumbents there.

“That would be up to the boards of both companies to figure out.”


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