Santos (ASX:STO) to create a $21bn business with Oil Search

Energy giants, Santos (ASX:STO) and Oil Search (ASX:OSH) are set to merge, after ongoing talk they have entered a definitive agreement subject to customary conditions. 

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’, with a market cap of around $21 billion.

Under the merger, Oil Search shareholders are to receive 0.6275 Santos shares for each Oil Search share held. Upon completion, Oil Search shareholders will 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.

Oil Search Chairman Rick Lee said, “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.”

Santos Chairman Keith Spence said, “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.”

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

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