Another potential merger on the cards as Woodside and Santos engage in preliminary talks

Two Australian energy giants – Woodside and Santos – are contemplating a potential A$79.09 billion (about $52.19 billion) merger to unlock more growth opportunities. The two players have confirmed that preliminary discussions are currently underway, however, neither of the two has offered any additional information at this point. If the merger goes through, it will create an Australian gas market giant.

While addressing recent media speculation, Woodside, which is worth around A$56.91 billion, highlighted that discussions regarding a potential merger with Santos remained “confidential and incomplete.”

“There is no certainty that the discussions will lead to a transaction. As a global energy company, Woodside continuously assesses a range of opportunities to create and deliver value for shareholders,” added the company.

Santos, which is valued at A$22.18 billion, also continuously reviews opportunities to create and deliver value for shareholders. The company underlined that it was in the process of assessing a range of alternative structural options with a view to unlocking value as noted during its investor day on November 22, 2023.

“The consideration of any merger is at an early stage and there is no agreement between the parties. There is no certainty that any transaction will eventuate from these discussions,” emphasized Santos.

Both Australian energy giants have previously wrapped up mergers with other oil and gas companies. Most recently, Woodside completed the merger with BHP’s oil and gas portfolio while Santos acquired Oil Search.

Woodside has been busy with several hydrocarbon projects. In September 2023, the Australian player brought on stream a deepwater oil project in the U.S. Gulf of Mexico ahead of the targeted first oil in 2024.

The company is also working on slashing emissions. To this end, the firm inked a non-binding memorandum of understanding (MoU) with the Japan-headquartered Kansai Electric Power Co. (KEPCO) to enable studies of a potential carbon capture and storage (CCS) value chain between Japan and Australia.

Just like Woodside, Santos is actively seeking to lower its carbon footprint with CCS. In line with this, the Australian giant joined forces with ADNOC to pursue the potential development of a joint global carbon management platform in a bid to support the decarbonization journey throughout Asia-Pacific and accelerate net zero goals.

The company and its joint venture partners also inked a memorandum of understanding (MoU) in August 2023 with Timor-Leste’s TIMOR GAP to explore partnership opportunities for a proposed CCS project at a gas and condensate field in the Timor Sea.

Additionally, Santos and SK E&S are pooling resources on cross-border CCS solutions, aiming to position Australia at the top of the list of countries working to assist Asia in lowering its carbon footprint.