- Woodside Energy and Santos call off merger talks
- The merger would have created a potential US$56 Billion global oil and gas giant
- The merger aimed to form a major LNG producer, drawing additional offshore investors
- Woodside and Santos rank among Australia’s top greenhouse gas emitters
Woodside and Santos
Woodside Energy is Australia’s largest independent oil and gas company, with a current market capitalization of about US$40 billion. It operates assets throughout Australia as well as international projects in the Caribbean and the US. It is the operator of the North West Shelf, Australia’s largest LNG project, and has stakes in other LNG projects such as Pluto, Wheatstone, and Browse. It also has interests in oil and gas fields in Senegal, Myanmar, and Canada.
Santos is Australia’s second largest independent oil and gas company, with a market cap of about US$16 billion. It has operations across Australia, Papua New Guinea, Timor-Leste, Indonesia, and Vietnam. It is the operator of the Gladstone LNG project in Queensland, and has stakes in other LNG projects such as Darwin LNG, PNG LNG, and Barossa. It also has interests in oil and gas fields in Western Australia, Northern Territory, South Australia, and Queensland.
Talks Ended
The merger talks between Woodside and Santos were first announced in December 2023, following media speculation. The two companies said they were exploring a potential merger of equals that would create a regional champion with a diverse portfolio of high quality assets. The merger was expected to generate significant synergies and cost savings, as well as enhance the scale and resilience of the combined entity.
However, after almost two months of due diligence and negotiations, the two companies could not reach an agreement on the terms of the deal. According to sources cited by Reuters and The Guardian, the main sticking point was the valuation level that Woodside was willing to offer for Santos. Woodside reportedly did not make a firm bid for Santos, while Santos was seeking a premium for its shares.
Woodside said in a statement that it would only pursue a deal that would add value for its shareholders. “While the discussions with Santos did not result in a transaction, Woodside considers that the global LNG sector provides significant potential for value creation,” Woodside CEO Meg O’Neill said.
Santos said in a statement that it did not see sufficient benefits from the combination to support a merger that would be in the best interests of its shareholders. “We have a strong balance sheet and continue to review options to unlock value for shareholders,” Santos said.
Implications
The failed merger is a rare setback in the global energy sector, where producers have been rushing to close deals amid rising demand for oil and gas. In October 2023, Exxon Mobil agreed to buy Pioneer Natural Resources for about $60 billion, while Chevron said it would acquire Hess for $53 billion. Other companies have sought to get bigger to take advantage of the Ukraine war, which is reshaping the map for global natural gas supply.
The merger between Woodside and Santos would have created a major LNG producer that could compete with global rivals such as Shell, TotalEnergies, and Qatar Petroleum. The combined entity would have had a production capacity of about 1.5 million barrels of oil equivalent per day (boe/d), and an LNG portfolio of about 30 million tonnes per annum (mtpa). It would have also had a pipeline of growth projects in Australia and overseas.
The merger would have also helped Woodside and Santos reduce their carbon footprint and transition to cleaner energy sources. Both companies have committed to achieving net zero emissions by 2050, and have invested in renewable energy projects such as hydrogen, solar, and wind. The merger would have enabled them to share best practices and technologies, as well as leverage their scale and resources.
However the merger also faced some challenges and risks. It would have raised competition concerns in Australia’s domestic gas market, where Woodside and Santos are major suppliers. It also could have exposed both companies to geopolitical uncertainties and regulatory changes in some of their key markets. Additionally, it might have undermined the distinct cultures and strategies of both firms.
Career Opportunities
Despite ending their merger talks, both Woodside and Santos remain attractive employers for people who are interested in working in the oil and gas industry. Both companies offer competitive salaries and benefits, as well as opportunities for learning and development, career progression, and international exposure.
Woodside has about 4,000 employees and contractors, and operates in 10 countries. They offer various career paths for engineers, geoscientists, technicians, tradespeople, business professionals, and graduates. They also have a range of programs and initiatives to support the development and wellbeing of employees, such as mentoring, coaching, flexible work arrangements, health and safety programs, and community engagement activities.
Santos has about 2,000 employees and contractors, and operates in six countries. They offer various career opportunities for engineers, geoscientists, operators, maintenance workers, business professionals, and graduates. Santos employees enjoy a variety of programs and initiatives to foster growth and engagement, such as learning and development courses, performance management systems, diversity and inclusion policies, and health and wellness programs.
If you are interested in working with Woodside or Santos, click over to their websites to learn more about their current vacancies, recruitment processes, and employee stories.