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Oil Search said on Monday it intended to recommend an improved buyout offer from Santos Ltd, worth A$8.4 billion ($6.2 billion), in a deal that would create a top-20 global oil and gas company.
The merged group would own oil and gas assets in Australia, Papua New Guinea (PNG) and Alaska, with the jewel in the crown considered to be their combined 42.5% stake in the PNG LNG project, overtaking the 33.2% stake owned by Exxon Mobil Corp, operator of the project.
With the Oil Search acquisition, Santos would gain size and heft as the industry jostles for capital from financiers and investors increasingly wary of fossil fuels and climate change. Other recent deals include Chevron Corp's takeover of Noble Energy and ConocoPhillips' takeover of Concho Resources.
Santos, Australia's second-largest independent gas producer, hiked its offer by 6.5% to 0.6275 new Santos shares for each Oil Search share from 0.589, which had been rejected in June by the Papua New Guinea-focused oil and gas producer.
Based on Santos's closing price on Friday, the deal values Oil Search at A$4.05 a share, a 6% premium over Oil Search's close on Friday. Oil Search's shares jumped as much as 8% on Monday but consistently traded just below the value of the offer, indicating that investors back the deal. Santos rose as much as 3.6%.
"We're happy. We're supportive of the transaction. We think the combined business is definitely better than the individual businesses," said Matthew Haupt, a portfolio manager at Wilson Asset Management, which owns shares in Oil Search and Santos.
Oil Search shareholders would own around 38.5% of the merged group, with Santos shareholders holding around 61.5%, compared with the original offer made in June which would have given Oil Search shareholders a 37% stake in the merged group.
Santos Managing Director Kevin Gallagher said the merger would create "an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets".
PNG LNG is prized as one of the world's lowest cost LNG projects, with expansion prospects and located close to the fastest growing gas markets in Asia. Oil Search also owns a stake in the separate Papua LNG project operated by TotalEnergies SE, which plans to share facilities with PNG LNG.
Analysts believe Santos may try to sell some of its PNG LNG stake to Total, noting that Santos had flagged a "potential opportunity to further optimise ownership across PNG LNG and Papua LNG".
"So much value upside spills out of a transaction with Total in PNG," said MST Marquee analyst Mark Samter.
Oil Search said that, subject to each company completing due diligence on the other, the Oil Search board intended to unanimously recommend that shareholders vote in favor of the revised offer in the absence of a superior proposal.
The Santos approach came at a vulnerable time for Oil Search as it is searching for a new chief executive to replace Keiran Wulff, who suddenly quit last month.
Source: Reuters
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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