Oil Search Era in Papua New Guinea Comes to An End As Santos Swallows it Up in A Merger

  Oil Search was incorporated on 17 January 1929 to explore what is now modern-day Papua New Guinea.

 Operating in PNG’s challenging terrain was a daunting prospect, but the company remained steadfast in its belief that there was significant oil and gas to be found in the unexplored region.

 

Oil Search Era in Papua New Guinea Comes to An End As Santos Swallow Up Oil Search in A Merger. [photo by Oil Search]

The company grew to be one of Papua New Guinea's largest companies, and in 2006 was responsible for 13% of Papua New Guinea's gross domestic product and was publicly listed on the Port Moresby and Australian Stock Exchanges with a market capitalization of around US$12 billion.

 The government of Papua New Guinea held a 17.6% interest with Oil Search operating in Yemen, Egypt, Libya, and the Kurdistan region of Iraq.

 In May 2014, ExxonMobil shipped the first cargo of liquefied natural gas (LNG) from the US$19 billion PNG LNG Project, in which Oil Search owns a 29% interest.

 In 2021, Oil Search agreed on terms with Santos to merge, with Oil Search shareholders taking a 38.5% shareholding in Santos. The merger took effect on 14 December 2021.

 Economist and National Affairs Institute director Paul Barker said investors felt Oil Search needed to refocus and recapitalize.

 "There was a slight instability factor over the course of years, a bit of uncertainty that related to the PNG market environment," Mr. Barker said.

 "Just in the last few years changes of management and a little bit of managerial controversy over certain issues."

 The merged Santos-Oil Search will have “unrivaled” growth opportunities and a stronger platform to navigate the transition to low carbon energy, Santos CEO Kevin Gallagher said after the scrip-based takeover of the Papua New Guinea oil and gas producer took effect.

Asset sales are also expected to be on the cards, including a selldown of Oil Search’s stake in an Alaskan oil project and of the combined company’s enlarged stake in the ExxonMobil-led PNG LNG project.

Production of the merged company will be about 117 million barrels a year based on each company’s 2021 output, while the resource base will amount to 4.867 billion barrels.

Oil Search will disappear from the stock exchanges of PNG and Australia at the end of the year, almost 93 years after it was first incorporated and that marks the Oil Search Era in Papua New Guinea.

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