ADNOC’s $30B Bid for Santos Set to Redefine ASX Energy Sector

About Santos Limited

Santos Ltd (ASX: STO) is one of Australia’s largest oil and gas producers, has received a near A$30 billion buyout offer from state-owned ADNOC, the Abu Dhabi National Oil Company. The indicative proposal aims to acquire full control of Santos’ gas and LNG assets across Australia and Southeast Asia, as ADNOC seeks to expand its global footprint in cleaner fossil fuel portfolios.

Strategic Value: Why Santos?

Santos operates key energy assets in the Cooper Basin, PNG LNG (13.5% stake), Barossa gas project, and Darwin LNG. With daily production of over 90 million barrels of oil equivalent (BOE) and a five-year capital expenditure plan exceeding A$6 billion, it is a core component of Australia’s gas exports.

The proposed acquisition comes as ADNOC accelerates efforts to secure long-term LNG supplies. Australia remains the world’s largest LNG exporter and a strategic partner for Asian demand hubs. Santos offers upstream scale, export infrastructure, and a stable operating regime, making it a top-tier target.

Financial Implications and Market Response

Santos shares surged 7.8% to A$8.32 on 14 June following reports of the ADNOC offer. The company’s valuation—approximately A$24.5 billion prior to the announcement—is now expected to reach A$28–30 billion should negotiations progress successfully.

From a valuation perspective, the A$30 billion offer implies an EV/EBITDA multiple of approximately 6.5x—above the industry average but seen as fair due to Santos’ high-margin LNG projects and consistent cash generation. ADNOC’s strong credit rating and sovereign backing also enable attractive financing structures that minimise integration risk.

For Santos shareholders, the acquisition could result in accelerated capital returns, including a potential special dividend or buyback depending on transaction terms. ADNOC is also likely to assume a more active governance role in Santos’ joint ventures, potentially unlocking operational synergies and greater downstream market access.

Regulatory Landscape and National Interest Considerations

ADNOC’s acquisition will require approval from the Foreign Investment Review Board (FIRB) and the ACCC, both of which are expected to support the deal due to its strategic value. Regulatory focus will include ADNOC’s emissions reduction strategy—particularly in relation to the Barossa gas project—and its commitment to Australian job continuity and community investment. ADNOC is reportedly developing a social impact package exceeding A$300 million.

FIRB will also assess the implications of foreign state-backed ownership on energy transparency and domestic supply security. Amid Australia’s push for energy diversification and emissions targets, the deal could set a precedent for balancing foreign capital inflow with national policy goals.

Broader ASX Market Impact and Investor Outlook

The proposed acquisition of Santos by ADNOC marks a pivotal shift in the ASX 200’s energy composition. As a top-five energy name by market capitalisation and index weight, Santos’ delisting would eliminate a major source of pure-play LNG exposure for institutional investors.

Fund managers are already reviewing their exposure to the energy sector’s benchmark makeup, with Santos’ exit likely to spark rebalancing across passive and active portfolios. This may shift liquidity into infrastructure-focused funds or global LNG producers with dual listings.

In the short term, ASX-listed mid-cap producers could gain institutional attention as investors look to redeploy capital into domestic upstream operations. The move also raises questions about how sovereign buyers are reshaping the global energy M&A landscape, especially as decarbonisation timelines influence asset valuations and deal urgency.

If completed, the deal could set a new benchmark for strategic LNG acquisitions and serve as a case study in balancing sovereign investment with domestic policy interests. The increased capital rotation within the energy sector is potentially benefiting mid-tier producers and adjacent infrastructure developers. Additionally, ETF rebalancing and sector reweighting could spur trading activity in ASX energy stocks for weeks following a formal deal announcement.