Shares in oil and gas group, Santos were nicely goosed by media reports about a possible $11 billion bid for the company.
The bid turned out to be one of these non-binding, non-indicative proposals which don’t commit either part and are a way of seeing if there is any interest.
The Australian Financial Review reported that a group of US investors had lobbed a proposal at Santos pitched at around $5.30 a share, or $11 billion.
Up went the shares rising 13% to a high of $4.95 where they ended.
The media report forced Santos to release a statement in which it confirmed it rejected a confidential, non-binding proposal from a company called Harbour Energy in August, and said it was not currently in takeover talks with the US investment company.
Santos said it had received a "confidential, non-binding conditional and indicative" proposal from Harbour on August 14 at $4.55 a share.
"The board rejected the approach on the basis that the indicative price was inadequate and the sources of funds were uncertain," it said in a statement to the ASX on Thursday.
Santos said it was "not currently engaged in discussions with, and has not received a current proposal from Harbour Energy regarding a change of control transaction".
According to the AFR, Linda Cook, a former executive director of Royal Dutch Shell, approached Santos’ board in the September quarter with an invitation to support a scheme takeover, which the board rejected.
The consortium was expected to be ready to represent a proposal to Santos “within weeks" at the higher price.
A Harbour Energy spokesman said the company did not comment on market rumours or speculation.
Earlier this month, Santos released its 2018 strategy, predicting a significant fall in sales volume for next year.
The company has kept to previously stated 2017 forecasts, expecting production levels to hit the upper end of 58 to 60 million barrels of oil equivalent (mmboe) and sales of 79 to 82 mmboe.
Chief financial officer Anthony Neilsen forecast production to remain steady for the next decade at between 55 and 60 mmboe.
However, sales volumes are expected to fall next year to between 72 and 78 mmboe, "primarily due to lower forecast third-party gas sales volumes and lower non-core asset volumes".
