Santos Okays XRG’s Request to Extend Takeover Deadline

Adelaide-based Santos, an independent oil and gas exploration and production company with operations across Australia, Papua New Guinea (PNG), Timor-Leste and the US, on Monday agreed to the request of the consortium led by UAE-based XRG, a subsidiary of Abu Dhabi National Oil Company (ADNOC), for a second extension to 19 September.

It may be recalled that the XRG-led consortium has offered to acquire the Santos for $18.7 billion, non-binding indicative proposal to acquire Santos in an all-cash deal for an offer price of $5.761 per share.

On 11 August, Santos announced it had agreed to an initial extension of the process and exclusivity deed dated 27 June to 22 August 2025 to enable the XRG consortium to finalise due diligence and progress the scheme implementation agreement (SIA).

Santos and the consortium are in the process of finalising the SIA, which will include customary protections for Santos’ shareholders in the event there is a longer than expected period before completion of the potential acquisition.

On 24 August, the XRG consortium again confirmed it has not found anything in due diligence that would lead it to withdraw its indicative proposal. However, the consortium has now requested a second extension of the exclusivity period to conclude due diligence and to allow it to obtain all necessary approvals to enter into a binding transaction.

Santos noted that the exclusivity restrictions summarised in its announcement of 27 June will continue to apply during the period of the extension; adding that a fiduciary exception to those restrictions enabling Santos to deal with potentially superior proposals from competing acquirers has applied since 25 July and would continue to apply during the extension.

However, Santos, which on Monday released its first-half 2025 results, again cautioned there is no certainty that a binding SIA will be agreed or that a potential transaction will proceed. The consortium’s cash offer price will be adjusted for any dividends paid by Santos since the indicative proposal.

The consortium is led by XRG, a subsidiary of Abu Dhabi National Oil Company (Adnoc) and includes Abu Dhabi Development Holding Company and Carlyle.

Santos’ H1 Results

Santos, which announced strong half-year results for 2025, said that free cash flow from operations remained strong at $1.1 billion. Sales revenue was $2.6 billion, EBITDAX was $1.8 billion and underlying profit was $508 million.

Production volumes were 44.1 million barrels of oil equivalent per day (MMBOE), also comparable with the prior year, and sales volumes were 47.2 MMBOE. Average realised LNG prices were strong for the period at $11.57 per MMBTU.

The Santos Board declared an interim dividend of US13.4 cents per share, franked to 10% and up on the prior year. This represents 40% of free cash flow from operations in line with the company’s dividend policy and is up on the prior year.

A non-cash exploration and evaluation impairment charge of $119 million was recognised in relation to the Hides footwall in PNG.

The excellent first half operational result reinforces the strength of our base business and our ability to self-execute development projects, highlighted by accelerated first oil guidance for Pikka phase 1 to the first quarter of 2026, DLNG RFSU achieved and Barossa first gas imminent.

The additional production and cash flows from Barossa LNG and Pikka phase 1 are expected to underpin stronger shareholder returns into the future.

Santos Managing Director and CEO Kevin Gallagher said that the company’s strong free cash flow from operations reflects the strength of Santos’ diversified portfolio, the success of their disciplined low-cost operating model and the cash-generative capability of the base business.

“The first half has also further demonstrated the company’s major development project execution excellence as a result of our in-house self-execution capability developed over the last decade,” Gallagher said.