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Santos merger set to clear final hurdle

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South Australia’s largest company has today moved further towards its merger with Oil Search, which is expected to be finalised this month to make it a $22 billion ‘regional champion’ in the oil and gas industry.

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Santos announced this morning it had received clearance from Papua New Guinea’s Independent Consumer and Competition Commission (ICCC) for the proposed merger with Oil Search.

It follows a vote by Oil Search shareholders yesterday, where more than 95 per cent backed the merger.

The National Court of Papua New Guinea is expected to rubber-stamp the ICCC decision at a hearing scheduled for tomorrow.

If this occurs, Oil Search will apply for its shares to be suspended from trade on the ASX and PNGX at market close on Friday. It will be removed from the S&P/ASX200 on Monday.

The merged company, which will be headquartered in Adelaide and retain the Santos name, is set to have a combined market capitalisation of $22.2 billion to put it just inside the top 20 Australian listed companies by size.

It will also be in the 20 largest global oil and gas companies and led by current Santos managing director and chief executive officer Kevin Gallagher, with three non-executive directors from Oil Search to join the Santos Board.

New Santos shares will commence trading on the ASX on Monday, December 20.

That will end a six-month process that began when Santos put a confidential merger proposal to Sydney-based Oil Search on June 25.

Oil Search rejected the initial offer as it did not offer appropriate value for shareholders but said it was open to further approaches.

The revised merger plan was put forward on August 2.

With offices in Sydney, Port Moresby, Alaska, Tokyo and Abu Dhabi, Oil Search has a history of active exploration and production in Papua New Guinea dating back to the 1920s.

It also acquired oil leases on the Alaskan North Slope in 2018.

With its origins in the Cooper Basin, Santos has one of the largest exploration and production acreages in Australia and extensive infrastructure.

It is already Australia’s largest domestic gas supplier and aims to be a leading Asia-Pacific LNG supplier.

In March, Santos approved its $4.7 billion Barossa project north-west of Darwin, which it says represents the biggest investment in Australia’s oil and gas sector since 2012.

Santos chairman Keith Spence has previously said the merger would allow Santos to become a global leader in the energy transition.

“The merger represents an attractive combination of two industry leaders to create a regional champion of quality, size and scale with a unique and diversified portfolio of long-life, low-cost oil and gas assets,” he said in September.

Santos shares were up more than 3 per cent this morning to be trading at $6.78 at noon.

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