WA gas giant Woodside has confirmed it is in discussions regarding a possible merger with fellow Australian energy company Santos.
Woodside has released a statement to the Australian Stock Exchange in response to media speculation, saying discussions remain confidential and incomplete, and there is no certainty that they’ll lead to a transaction.
Woodside’s statement said the company continuously assesses a range of opportunities to deliver value for shareholders, and will continue to update the market.
Santos also released a statement, confirming it had started “preliminary discussions”.”Santos continuously reviews opportunities to create and deliver value for shareholders,” the statement said.”Concurrently, Santos is assessing a range of alternative structural options with a view to unlocking value as referred to on Santos’ investor day on 22 November 2023.”
However Santos did say “any consideration of any merger is at an early stage and there is no agreement between the parties”, adding there was “no certainty any transaction will eventuate from these discussions”.
A merger would create an oil and gas behemoth with a combined market capitalisation of about $80 billion.
While headquartered in Perth, Woodside is a major player in the global energy market and operates the North West Shelf and Pluto gas projects in the Pilbara.
The company has faced intense resistance from environmentalists and traditional owners over its massive Scarborough gas project.
Santos is also a global energy company with operations spanning Australia, Papua New Guinea, Timor-Leste and the United States.
Woodside shares closed Thursday at $29.97, while Santos shares were valued at $6.83.
‘Get big or get out’
Independent corporate analyst Peter Strachan says the merger talks makes sense for both companies.
“There’s the opportunity to get big or get out,” he said.
