Oil Search Shareholders Vote For Santos Merger

Oil Search Shareholders Vote For Santos Merger
The shareholders of Oil Search have voted to approve the proposed merger with energy giant Santos.

The shareholders of Australian company Oil Search have voted to approve the proposed merger with compatriot energy giant Santos.

At the beginning of September, the two companies entered into a definitive agreement to merge the two companies in a deal valued at about $6.1 billion. The merged entity, which would be one of the 20 largest global oil and gas companies, will be valued at around $16 billion.

Under the terms of the merger, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share. Upon completion of the merger, Oil Search shareholders will own approximately 38.5 percent of the merged entity while Santos’ shareholders will own approximately 61.5 percent.

At the time of this announcement, the Oil Search board of directors unanimously recommended that the company’s shareholders vote in favor of the merger. The company also stated that each director which holds any shares in the company would also vote in favor of the deal.

Earlier this week, Santos received the necessary approval letter and exception notice from the Papua New Guinea Securities Commission to implement the proposed merger with Oil Search.

The next hurdle was cleared on Tuesday, December 7, when some 95.1 percent of Oil Search shareholders voted in favor of the merger.

Now, the deal between the two firms only remains subject to approval from Papua New Guinea’s National Court of Justice. If the court approves the deal, the scheme will become legally effective on Friday, December 10.

“If this occurs, Oil Search will apply for its shares to be suspended from trading on the PNGX and ASX with effect from the close of trade on Friday, December 10,” Oil Search said in a statement.

Santos claimed in earlier statements that the combination of the two companies would create a ‘regional champion’ which will have a diversified portfolio of high quality, long-life, low-cost assets across Australia, Timor-Leste, Papua New Guinea, and North America with significant growth optionality.

The combined entity would have 2021 production of approximately 116 million barrels of oil equivalent, a 2P+2C resource base of 4,867 million barrels of oil equivalent, and an investment-grade balance sheet with more than $5.5 billion of liquidity to self-fund development projects.

Since there are critics of the merger due to Santos’ plan to delist Oil Search stock from Papua New Guinea and Australia stock exchanges, Santos stated last week it would make a secondary listing on the PNG exchange for an exempt foreign listing so Papua New Guinea-based shareholders – over 4,000 of them – could trade Santos shares on the PNG exchange.

The company also stated that there were no planned employee job losses for the PNG-based national workforce.

Other pledges made by Santos include a Papua New Guinea national being on the board of directors, not stopping Oil Search’s charity foundation in PNG, making the leadership of the PNG business in-country, creating a capability-building program for Papua New Guinea nationals, continuing exploration in PNG, pursuing clean fuels and CCS opportunities in the country.

To contact the author, email bojan.lepic@rigzone.com

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