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Australian Firms in Merger Talks to Create $52-Billion Energy Giant

Australian oil and gas producers Woodside Energy and Santos confirmed on Thursday they are in talks regarding a potential merger that would create a giant energy group with a market capitalization of around $52.6 billion (AUS$80 billion).

“In response to recent media speculation, Woodside confirms it is in discussions regarding a potential merger with Santos Ltd,” Woodside said in a brief statement on Thursday.

“Discussions remain confidential and incomplete, and there is no certainty that the discussions will lead to a transaction,” the company added.

“As a global energy company, Woodside continuously assesses a range of opportunities to create and deliver value for shareholders.”

Santos, for its part, confirmed “it has engaged in preliminary discussions with Woodside regarding a potential merger.”

Santos also stressed that 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.”

If the talks do lead to a merger, it would create a giant oil and gas producer and a major LNG exporter from Australia, one of the world’s top three LNG exporters alongside the United States and Qatar.

But the creation of a large LNG exporting company in Australia could warrant closer scrutiny because of a potential impact on competition, a spokesperson for the Australian Competition and Consumer Commission told Reuters.

A potential deal would be one of the largest corporate mergers in Australia for years and would follow a string of mega deals in the energy sector in recent weeks in the United States.

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In October, ExxonMobil announced an agreement to buy Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion. The implied total enterprise value of the transaction, including net debt, is around $64.5 billion.

Less than two weeks later, the other U.S. supermajor, Chevron, said it would buy Hess Corporation in an all-stock transaction valued at $53 billion with a total enterprise value, including debt, at $60 billion.

By Charles Kennedy for Oilprice.com

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