Santos Limited (ASX: STO) confirmed that a consortium led by Abu Dhabi National Oil Company’s subsidiary XRG P.J.S.C., alongside Abu Dhabi Development Holding Company and Carlyle, has withdrawn its US$16 billion takeover proposal, ending months of negotiations over a potential acquisition.

The XRG Consortium pulled its non-binding offer of US$5.626 per share after failing to agree on risk allocation and regulatory commitments under a proposed Scheme Implementation Agreement.

The bid, first tabled in June 2025, would have been one of the year’s largest oil and gas transactions, expanding ADNOC’s LNG and upstream gas presence in Asia-Pacific. Santos had extended exclusivity twice while due diligence was underway, but by mid-September the board pressed for a binding agreement on acceptable terms. Santos cited disagreements over the consortium’s obligations to secure regulatory approvals and commitments to domestic gas supply as reasons the deal collapsed.

The withdrawal comes as Santos continues to emphasize its independent growth strategy, anchored by two major projects: the Barossa LNG development offshore Northern Australia and the Pikka Phase 1 oil project in Alaska. Together, these are expected to lift output by around 30% by 2027.

Chair Keith Spence highlighted that Santos’ low-cost model and pipeline of growth projects position the company to deliver rising free cash flow, lower unit costs, and sustained shareholder returns, even without a merger.

The collapse underscores the mounting regulatory and political challenges facing cross-border oil and gas M&A in Australia, where authorities closely scrutinize foreign ownership of strategic energy assets. For ADNOC, the move represents a pause in its aggressive push into global gas markets, after striking a series of LNG and upstream deals across Asia and Europe.

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