Santos shares jump on reported Middle East takeover interest

Santos shares have leapt nearly 6 per cent on the back of a report that two Middle East energy giants have looked at buying the Australian company.

The stock was up 46¢ at a two-year high of $8.14 at 9.20am, capitalising Santos at $25 billion.

While Santos declined to comment, international news agency Bloomberg had earlier reported that Saudi Aramco and Abu Dhabi National Oil Co had separately studied potential bids for Santos as they seek to ramp up their gas investments overseas.

Santos has LNG projects on Australia’s east coast and in PNG and Timor-Leste. It also has gas operations serving domestic markets, including WA.

Bloomberg said Gulf countries were investing billions of dollars in gas, which is seen as an important bridge fuel in the energy transition.

Santos and its chief executive Kevin Gallagher have been under pressure to find deals to satisfy activist shareholders since Woodside walked away from a potential merger in February after failing to agree on terms.

Woodside shareholders had questioned the benefits to the WA group of a Woodside-led merger and the premium being demanded by Santos investors.

Santos said at the time it also did not see a deal as being in the best interests of shareholders, but suggested it would look elsewhere to appease those shareholders demanding the group act more aggressively to lift its share price.

Rick Wilkinson, the chief executive of Adelaide consultancy EnergyQuest said the reported interest was in line with the strategies of both Saudi Aramco and ADNOC.

“It would be consistent with the global strategies of Aramco and ADNOC to run the ruler over a company such as Santos,” Mr Wilkinson said.

“It is still early days to see how serious it is.

“The LNG part of the portfolio is expected to be the most interesting to them. Santos’ domestic gas portfolio is in decline or late stage production, which are not proven strengths of the potential buyers.”

More to come.