(Bloomberg) -- Shareholders wiped A$3 billion ($2 billion) off the market value of Australia’s Santos Ltd. after a third attempted sale faltered, raising pressure on the oil and gas group to boost its valuation and returns — or find an alternative partner.

A group led by Abu Dhabi National Oil Co.’s XRG unit walked away from a $19 billion takeover bid late on Wednesday after the companies failed to agree on key terms, ending months of talks. Santos shares fell the the most in five years, dragging its market capitalization below $15 billion.

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At the heart of the latest failed tie-up is the gap between the group’s view of its value and what potential suitors are willing to pay at a time when project costs are rising. Still, the Adnoc debacle is a major setback for Chief Executive Officer Kevin Gallagher, who has long sought to maximize the company’s potential independently. He was already facing investor criticism for betting on splashy investments over higher shareholder payouts.

“If Santos was committed to shareholder value, it would cease allocating capital to high cost, high risk projects and accelerate returns to investors,” said Alex Hillman, lead analyst for oil and gas at shareholder advocacy group Australasian Centre for Corporate Responsibility.

Santos has been here before. In 2018, the Adelaide-based company spurned advances from US-based Harbour Energy Ltd., while talks with larger domestic rival Woodside Energy Group Ltd. broke down last year.

But shareholders are likely to renew calls for the company to take action, including potentially splitting its domestic and LNG businesses, according to Josh Ruciman, gas analyst at the Institute for Energy Economics and Financial Analysis. Santos has stakes in LNG export plants in Australia and Papua New Guinea and selling those may be attractive considering a looming glut in supply and uncertain demand, he added.

“Whether Santos’ current management is willing to do so is another question,” Ruciman added.

The deal’s collapse is likely to reinforce concerns around the outlook of core assets such as the company’s Papua project, said Citi analyst Tom Wallington. Expansion plans at the export plant have been mired by delays.

Not everyone would support a split. The division would be “too hard”, said Matthew Haupt, portfolio manager at Wilson Asset Management, which has a stake in the producer. Most of Santos’ revenue comes from LNG.

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“Santos is in pretty good shape and should push on with operations, as well as generate the cash and start capital management,” he said.

Gallagher, who took over as chief executive of Santos in 2016, has spent the decade transforming the company into a formidable gas exporter, slashing drilling costs and boosting profitability from the company’s aging gas assets, while weathering a drop in oil prices.

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Several of Santos’ growth projects, spearheaded by Gallagher, are nearing fruition. Barossa — criticized for being among the dirtiest gas projects in the world — is slated to start this month after Gallagher overcame legal challenges and secured approvals.

That will allow the company to resume production at its Darwin LNG plant, which shut in 2023 after an older gas field ran dry. Together with the Pikka oil project in Alaska, Barossa is expected to lift Santos’ output about 30% by 2027.

In its statement, Santos said the start of the two major development projects will support greater returns to shareholders.

Shareholders will be “bruised” by the offer’s sudden withdrawal and question the negotiation tactics used in recent weeks, Jarden Group Ltd. analysts Nik Burns and Joshua Mills-Bayne.

Adnoc’s decision to walk away from its takeover offer reflected differences over valuation and tax, according to people familiar with the matter. That echoes concerns over price that ultimately sank a deal with Woodside in 2024. Furthermore, reports of a leak at the Darwin LNG plant weren’t disclosed until late in the process, the people said, raising questions about hidden costs.

For its part, Santos expressed concerns about delays in reaching a so-called scheme implementation agreement with the consortium, which also included Abu Dhabi Development Holding Co. and Carlyle Group.

While the deal had not prompted high-level government opposition, the tie-up had faced vocal naysayers at home. The Offshore Alliance — a group representing two major labor unions — this week urged Canberra to block the sale to Adnoc and keep Santos “in Australian hands.”

Shares fell as much as 14% in Sydney on Thursday. The stock was down 12% at 2:53 p.m. in Sydney, valuing the company at A$21.8 billion.

Other Australian energy stocks also fell on Thursday, including Woodside, Karoon Energy Ltd. and Beach Energy Ltd.

--With assistance from Dan Murtaugh.

(Updates with analyst’s comment in the fourth paragraph.)

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