Sopuruchi Onwuka

A consortium led by Abu Dhabi National Oil Company (ADNOC) has thrown in attention-grabbing $18.7 billion offer to acquire Australia’s second-largest gas producer, Santos, in a bid that focuses on the future potentials of both companies when merged together.

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Goldman Sachs and JB North & Co are acting as financial advisers to Santos as the deal confronts ordeals in pushing through multiple regulatory approvals.

Santos operates Darwin LNG, Gladstone LNG, and holds a majority stake in PNG LNG, while developing the Pikka oil project in Alaska and a $2.3 billion domestic coal seam gas project.

In an announcement a copy of which was sent to The Oracle Today, ADNOC’s investment arm, XRG, with Abu Dhabi Development Holding Company and Carlyle, offered $18.7 billion in cash, translating to $5.76 per existing Santos share.

The offer, according to the company, represents a 28% premium to the closing share price of Santos as at June 13, 2025. And following the offer, Santos shares have surged 11–15%, reflecting optimism tempered by regulatory and geopolitical uncertainties.

The deal, however, needs approvals from six regulators in Australia, Papua New Guinea, and the U.S., with risks due to Santos’s critical energy infrastructure.

Implementation of the scheme under the SIA would be conditional on among other things customary approval from the Foreign Investment Review Board, Australian Securities and Investments Commission, National Offshore Petroleum Titles Administrator, PNG Securities Commission, PNG Independent Consumer and Competition Commission and Committee on Foreign Investment in the United States.

While the Australian gas company’s leadership may be in favor of the deal, regulators may have misgivings; which makes the future of the deal uncertain. Santos controls critical energy infrastructure in Australia, which would make regulatory approval of its takeover by a foreign company a challenge.

Yet approval from Papua New Guinea is also unlikely, analysts pointed out. In total, the companies need the go-ahead from six separate agencies in Australia, Papua New Guinea, and even the United States, to proceed with the deal.

According to the company, the bid supports ADNOC’s ambition to build a global LNG portfolio with 20–25 million metric tons annual capacity by 2035, targeting Santos’s low-cost LNG assets, especially PNG LNG.

Santos declared that the Indicative Proposal remains subject to the satisfactory completion of confirmatory due diligence by the XRG Consortium and the negotiation and execution of an agreed scheme implementation agreement (SIA) with Santos on customary terms and conditions.

After careful consideration of the Indicative Proposal (including in consultation with its financial and legal advisers), the Santos Board has determined that it is in the best interests of Santos Shareholders to provide the XRG Consortium with access to confidential information to conduct confirmatory due diligence and negotiate the terms and conditions of an SIA, subject to reaching agreement with the XRG Consortium on the terms on which access to due diligence will be provided.

The XRG Consortium has indicated that it requires Santos to enter into a Process and Exclusivity Deed (to include, among other things, exclusivity restrictions) before it progresses to undertaking confirmatory due diligence and negotiating the terms of the SIA. Santos intends to negotiate the terms of the Process and Exclusivity Deed and an associated Confidentiality Deed with the XRG Consortium.

The Santos Board confirms that, subject to reaching agreement on acceptable terms of a binding SIA, it intends to unanimously recommend that Santos Shareholders vote in favour of the Potential Transaction, in the absence of a superior proposal and subject to an independent expert concluding, and continuing to conclude, that the Potential Transaction is fair and reasonable and in the best interests of Santos Shareholders.

Santos Shareholders do not need to take any action in relation to the Indicative Proposal. Santos notes that there is no certainty that the XRG Consortium will enter into a binding SIA or that a Potential Transaction will proceed. Santos will continue to keep its Shareholders informed in accordance with its continuous disclosure obligations.