Santos Gets $18.72 Billion Takeover Offer From Adnoc-Led Consortium — Update

By David Winning

SYDNEY--Santos, Australia's second-largest producer of oil and natural gas, on Monday said it has received a takeover offer from a consortium led by Abu Dhabi's national oil company worth some US$18.72 billion.

Santos said the consortium, led by Abu Dhabi National Oil Co. unit XRG, is offering 8.89 Australian dollars a share, equivalent to US$5.76, in cash. That offer--described by Santos as final--follows two proposals made in March worth A$8.00 a share and A$8.60 a share, respectively.

Santos said it intends to recommend that shareholders accept the deal terms if a binding offer is made by the consortium, which also includes Abu Dhabi Development Holding Co. and private-equity firm Carlyle.

A deal that would rank as one of the largest in the energy sector this year and talks are happening against a backdrop of rising crude-oil and natural gas prices as the Israel-Iran conflict threatens to disrupt the global supply of energy. Brent crude--the global benchmark--rose by 12% last week as investors bet that Iran's oil exports of some 1.5 million barrels per day could be curtailed.

Energy companies are doubling down on fossil fuels even as many countries look to reduce greenhouse-gas emissions and chart a clean-energy future, such as by building out wind and solar farms. Late last month, EOG Resources said it has agreed to buy U.S.-focused Encino Acquisition Partners for US$5.6 billion. Three months earlier, Diamondback Energy agreed to buy Double Eagle, a big West Texas crude producer.

Santos owns crude oil and natural gas assets from Alaska to Australia and neighboring Papua New Guinea. It is on the cusp of bringing online a new project, known as Barossa, offshore Australia that will supply a facility exporting liquefied natural gas to customers in Asia.

The Adelaide, South Australia-based company has grown through investments and deals such as the 2021 acquisition of smaller rival Oil Search, which was Papua New Guinea's largest oil producer and owned a minority stake in the Exxon Mobil-operated PNG LNG gas-export project.

Still, Santos has long been vulnerable to a takeover. In 2024, the company held takeover talks over a merger with Australia's Woodside Energy that could have created a gas company worth some US$57 billion at the time, but a deal couldn't be reached.

Write to David Winning at david.winning@wsj.com