Highlights

Santos shares fell 11.1% to AUD 6.80 on 18 September 2025 after the XRG Consortium withdrew its non-binding takeover proposal.

The decision follows extended negotiations on a Scheme Implementation Agreement, with unresolved issues around risk allocation and regulatory approvals.

Santos reaffirmed its strategy, highlighting progress on its Barossa and Pikka Phase 1 projects, which are expected to lift production by 30% by 2027.

Santos Limited (ASX: STO) shares declined 11.1% to close at AUD 6.80 on 18 September 2025 after the company announced that the XRG Consortium had withdrawn its non-binding indicative proposal to acquire 100% of Santos.

Withdrawal of Indicative Proposal

The XRG Consortium, led by XRG P.J.S.C., a subsidiary of Abu Dhabi National Oil Company (ADNOC), and including Abu Dhabi Development Holding Company and Carlyle, had originally made a cash scheme of arrangement proposal on 16 June 2025.

Following two extensions of the Process and Exclusivity Deed, the parties had been working towards finalising a Scheme Implementation Agreement (SIA). Santos confirmed that the Consortium’s due diligence had not raised concerns that would cause it to withdraw its indicative proposal.

However, on 17 September 2025, the Consortium notified Santos of its decision not to proceed. The notification stated that the Consortium maintained a positive view of the Santos business and expressed respect for the management team.

Issues in Reaching Agreement

Santos explained that the withdrawal was due to disagreements on risk-sharing under the proposed SIA. The Board had expressed concern about delays and emphasised the need for terms that protected shareholder value, given the extended timeframe to completion and regulatory risks.

Key points of contention included the Consortium’s obligation to secure regulatory approvals and its commitment to the development and supply of domestic gas. Santos stated that the Consortium would not agree to an allocation of risks that it deemed appropriate for shareholders.

Santos’ Strategic Outlook

Despite the withdrawal, Santos highlighted its ongoing operational and project progress. The company continues to pursue its strategy based on disciplined, low-cost operations.

Two major development projects—Barossa and Pikka Phase 1—are advancing and expected to support approximately a 30% increase in production by 2027. Both projects are described as materially de-risked through the company’s self-execute capabilities.

As these projects come online, Santos anticipates a significant boost in free cash flow generation, enabling greater shareholder returns under its capital allocation framework.

Chairman Keith Spence reiterated that the company has a clear strategy, established leadership, and a pipeline of growth opportunities across its global portfolio. He added that Santos remains focused on cash generation, shareholder returns, reinvestment to sustain infrastructure, and production growth while maintaining safe and reliable operations.