Update: ADNOC 'will not proceed with a binding offer for Santos'

19 August

Just over a week after Australia-headquartered LNG specialist Santos extended the terms of a potential takeover proposal from a consortium of entities tied to and including Abu Dhabi state oil major ADNOC, Santos has said it has not managed to reach "acceptable terms" on a binding deal with XRG Consortium. 

In a note to investors, Santos said XRG Consortium had communicated its inability to sign a binding deal until it has received final approvals. Those approvals, according to XRG Consortium’s message, would take an estimated four weeks to secure from the point at which terms of a binding deal have been reached. 

With Santos having extended the date of expiration of an exclusivity period for talks with XRG around the deal to 22 August, the company said it will now produce its second quarter performance report on 25 August, after the exclusivity period has expired without a final, binding deal.

"Notwithstanding this development, discussions with the XRG Consortium remain ongoing," Santos said. "While discussions and final confirmatory due diligence have continued to be collaborative, the parties are yet to reach agreement on acceptable terms."

11 August

ADNOC has asked for more time to complete checks on a potential acquisition proposal that, if agreed, would effect a complete takeover of Australia-headquartered LNG giant, Santos.

ADNOC subsidiary XRG, which includes Abu Dhabi Development Holding Co and private equity investors Carlyle Group, has submitted a non-binding indicative proposal for 100% of Santos’ shares at a price of US$5.76 per share.

According to Santos ’s latest financial reports and stock price, the company’s current number of shares is just over 3.25Bn, setting the indicative price for the ADNOC proposal at more than US$18.7Bn.

"The XRG Consortium has confirmed it has not discovered anything to date that would cause the XRG Consortium to withdraw its indicative proposal and has confirmed its commitment to working constructively with Santos to complete the due diligence promptly and agree on a binding transaction," a stock exchange statement attributed to Santos managing director and chief executive Kevin Gallagher told investors.

"Santos notes there is no certainty the XRG Consortium will enter into a binding [agreement] on terms acceptable to Santos or that the potential transaction will proceed," the statement continued.

According to Santos, the newly agreed deadline for the consortium to complete its "due diligence" is 22 August 2025.

Santos sees 10-year-old Gladstone LNG court case upheld by Australian court

The Queensland Supreme Court has ruled in favour of Santos in proceedings brought by the company against US-based engineering contracting firm Fluor Australia. The Court ruled that Fluor must pay approximately A$692M (US$452M) to Santos and its co-venturers, "with further sums yet to be determined," according to Santos.

The court case arose under an engineering and construction contract Santos entered into with Fluor in 2011 for the development of production facilities that formed part of the Gladstone LNG project. Construction took place between 2011 and 2014.

"Santos argued that Fluor was not entitled to all the costs it had claimed and received payment for under the contract. Santos sought to recover those amounts and also made claims to recover liquidated damages associated with the late completion of the project. Further, Santos sought to enforce against a parent company guarantee from Fluor Corporation," Santos said.

The Queensland Supreme Court referred Santos’ claims to three referees who provided their final report on 14 July 2023. In the referees’ opinion, Santos was entitled to recover certain costs.

Noting that a final judgment is not expected until later this year, Fluor Corporation said it acknowledges the 8 August 2025 decision in favour of Santos by the Supreme Court of Queensland.

"The court generally accepted the recommendations of a panel of referees that the court appointed to oversee the case despite Fluor’s objection," the company said. "The dispute has been ongoing since 2016 over Santos’ efforts to recover costs related to a reimbursable project completed by Fluor in 2015."

According to Fluor, further arguments and input from both companies will be heard by the court before a final judgment is delivered, and Fluor claimed the "contracting principles addressed by the court have wide-sweeping consequences in the engineering and construction industry".

The company said it is reviewing the court decision and considering a response and "the timing of its appeal".

"We are also working with our insurance carriers to address the obligations arising from the final judgment," Fluor said.

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