Recent rumours swirling around Santos (ASX:STO) suggest a potential takeover bid by Middle Eastern giants Saudi Aramco and Abu Dhabi National Oil Co (Adnoc). However, market analysts remain sceptical about the likelihood of such a deal materialising, despite ongoing talks with third parties regarding asset sales aimed at unlocking shareholder value.
Earlier this year, Santos was in the spotlight due to a proposed $80 billion merger with Woodside Energy, which eventually collapsed. Since then, pressure has mounted from investors for CEO Kevin Gallagher’s team to explore strategic alternatives to bolster the company's languishing stock price.
The latest speculation stems from a Bloomberg report indicating preliminary interest from Aramco and Adnoc. However, experts, including Saul Kavonic of MST Marquee, downplay the feasibility of a serious bid from these Middle Eastern entities. Instead, attention shifts to potential suitors like European majors, EIG-owned MidOcean Energy, and ConocoPhillips, each facing their own hurdles in pursuing a takeover of Santos.
EIG, which unsuccessfully attempted a $14.4 billion bid for Santos in 2018 and recently expanded its footprint in Australia's gas sector, remains a player with renewed interest. However, Santos remains tight-lipped, refusing to comment on market speculations.
Meanwhile, Santos continues to focus on its growth initiatives, including investments in carbon capture and storage technology, and major oil and gas projects in Alaska and the Timor Sea. Despite recent workforce reductions and scrutiny from environmental groups, the company remains committed to expanding its operational reach.
As Santos navigates these complexities, the possibility of Middle Eastern involvement remains uncertain, leaving stakeholders and market observers to ponder the company's strategic direction in the face of persistent takeover rumours.
