Australia’s Woodside and Santos in Preliminary Talks for $53 Billion Oil-Gas Merger
Merger Talks Between Woodside and Santos
Australia’s energy giants Woodside and Santos Ltd have entered preliminary merger discussions, potentially marking a significant deal in the oil and gas sector. The combined market value of the companies is approximately $52 billion, highlighting the potential impact of this merger on the global energy landscape.
Challenges Faced by the Companies
The potential merger comes as both companies confront challenges in their domestic projects, including legal disputes with Indigenous communities and the growing pressures of decarbonization. Additionally, both Woodside and Santos have experienced underperformance compared to their global peers, adding further complexities to their operational landscape.
Key Details on Woodside and Santos
- Woodside’s market cap: $37.39 billion
- Santos’ market cap: $15.56 billion
- Woodside’s 2022 production: 157.7 million barrels of oil equivalent (mmboe)
- Santos’ 2022 production: 103.2 mmboe
- Woodside’s proved plus probable reserves: 3,640.3 mmboe
- Santos’ proved plus probable reserves: 1,745 mmboe
Assets and Projects
Woodside operates major liquefied natural gas (LNG) export facilities in Australia, including North West Shelf and Pluto LNG. The company is also involved in oil and gas joint ventures in the Bass Strait and globally operates in the U.S. Gulf of Mexico and Senegal. Santos, on the other hand, operates Gladstone LNG and holds a stake in Papua New Guinea LNG, with a focus on domestic gas production in Western Australia and offshore oil fields in Australia and the U.S.
Combined Impact of Merger
If the merger proceeds, the companies would have a 26% share of Australia’s east coast gas market, consolidating their position as key players in the region. The combined oil and gas production for 2022 would total slightly over 260 million barrels of oil equivalent, with proven plus probable reserves reaching 5.39 billion mmboe.
Regulatory Considerations
The Australian Competition and Consumer Commission (ACCC) has expressed interest in the potential merger, signaling a potential review of its impact on competition. Analysts anticipate potential regulatory requirements, including potential divestitures of certain assets to address competition concerns.
Conclusion
The merger talks between Woodside and Santos represent a significant development in the energy sector, with potential far-reaching implications for both companies and the broader industry. As discussions progress, the impact of this potential merger on the global energy landscape will continue to unfold.
