On Tuesday, Oil Search Ltd. acting CEO Peter Fredericson said that a merger with Santos Ltd. will be crucial to its growth plans as size is going to matter in the industry.
In August, Oil Search agreed to an all-stock takeover following Santos’ raising offer. Oil Search shareholders will now hold a 38.5% stake in a merged group, up from an earlier offer of 37%. Santos shareholders will own the remaining 61.5%.
The newly merged company will be valued at AUD20 billion (USD14 billion). Oil Search added AUD600 million (USD434.4 million).
“At the size we are at now, and given the size of the projects we want to invest in now, we need to get access to broader capital markets. And we need more size to do that,” Fredericson said, underlining the importance of the capital to fund its growth plans.
However, he also said the Santos deal might slow Oil Search’s Pikka oil project stake sale in Alaska, where it and its partner Repsol want to sell a combined 30% stake this year before making a go-ahead decision on the project.
