Australia’s two largest oil and gas companies, Woodside Energy Group Ltd (ASX:WDS, LSE:WDS, OTC:WOPEF) and Santos have confirmed they are in merger talks, with a potential deal worth around A$80 billion (£42bn, US$53bn).
Woodside and Santos said that they had opened talks over a potential merger that, if consummated, would largely consolidate Australia’s LNG sector into one company.
Woodside, which is valued at A$57 billion, said talks were “incomplete” and there was “no certainty that discussions would lead to a transaction”.
Santos, worth A$22 billion said the talks were “preliminary” and that it was assessing “a range of alternative structural options” to unlock value.
Woodside highlighted that it "continuously assesses a range of opportunities to create and deliver value for shareholders".
The talks follow hard on the heels of other mega-merges in the energy sector, with Exxon Mobil making a US$60 billion swoop for shale rival Pioneer Natural Resources (NYSE:PXD) and Chevron snapping up Hess for US$53 billion.
This has lengthened the odds on the much-touted prospect of Exxon or Chevron buying European majors, but increased pressure on Shell PLC (LSE:SHEL, NYSE:SHEL) and BP PLC (LSE:BP.) to examine big M&A to not get left behind.