Santos and Woodside End $53bn Merger Talks, Impacts Global LNG Sector

Australian independent energy companies Santos and Woodside Energy have decided not to proceed with their potential $53 billion merger. The decision comes after two months of discussions following the emergence of preliminary talks between the firms. Woodside CEO Meg O’Neill stated that the company conducts thorough due diligence for every opportunity and will only pursue transactions that are value-accretive for shareholders. While the discussions with Santos did not result in a transaction, Woodside believes that there is significant potential for value creation in the global LNG sector. Woodside is currently the largest gas and oil producer in Australia, while Santos is the second largest. In 2021 and 2022, Woodside merged with BHP’s petroleum arm and Santos tied up with independent Oil Search, respectively. The merged entity would have become the fourth-largest listed LNG producer globally, following Shell, ExxonMobil, and Chevron. Analysts noted that although some efficiencies could have been gained from the merger, Woodside and Santos lack operational intersections. Both companies’ LNG output is primarily committed through term contracts, limiting the merged entity’s ability to trade LNG in the spot market.