Santos Steers Clear of Abu Dhabi Deal
Photo Credit: Charles Bell | Alaska Business
The Pikka Project remains an Australian endeavor. A consortium led by Abu Dhabi National Oil Company decided to withdraw from a proposed $18.7 billion takeover of Santos, the parent company of the Pikka Phase 1 development on the North Slope.
Extended Due Diligence
The original proposal on June 16 from XRG, a consortium including Abu Dhabi Developmental Holding Company and private equity firm Carlyle, was for $5.76 per share in cash. The XRG consortium requested an extension to the due diligence period while acknowledging that it had not found anything that would lead it to withdraw.
On September 15, the Santos board advised the XRG consortium that Santos expected to enter into an implementation agreement for $5.626 per share if a binding proposal was received on acceptable terms. By the deadline on September 19, Australia time, XRG notified Santos that it would not proceed with the transaction.
Santos stock started the day at $5.19 per share, and after the decision the price dropped to $4.75 by the end of trading.
The Santos board had expressed concern about XRG delaying the agreement and found that the consortium would not agree to acceptable terms which protected value for Santos shareholders, considering the likely extended timeframe to completion and the regulatory risk involved. Further, Santos disagreed with the XRG consortium’s allocation of risk, such as an obligation to secure regulatory approvals and a commitment to develop Australian natural gas.
The XRG consortium, meanwhile, stated that it maintains a positive view of the Santos business and has respect for the management team.
Current Issue
March 2026
Santos says it continues to execute its two major development projects, Pikka Phase 1 and Barossa, off Australia’s northern shore, positioning Santos for around a 30 percent increase in production by 2027. Santos Board Chair Keith Spence says, “With production set to rise as Barossa and Pikka Phase 1 come online, and unit production cost expected to trend lower over time, our strategy is clear: generate cash, reward shareholders, reinvest to backfill and sustain our infrastructure, and build and grow our production, while continuing to operate safely and reliably.”
At the Alaska Oil and Gas Association conference last month, Santos was anticipating first oil from Pikka Phase 1 in the first quarter of 2026.
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