santos-shares-plummet Santos shares experienced their steepest decline in five years this week following the collapse of a massive $28.5 billion takeover bid. The dramatic turn of events has left investors questioning the energy giant’s immediate prospects while CEO Kevin Gallagher navigates mounting regulatory pressures.
The Deal That Never Was
On September 17, 2025, an Abu Dhabi National Oil Co.’s XRG unit santos-shares-plummet walked away from a $19 billion takeover bid late on Wednesday after the companies failed to agree on key terms. The consortium, which included Abu Dhabi Development Holding Co. and Carlyle Group, had been in exclusive negotiations since June.
Santos shares fell the most in five years, dragging its market capitalisation below $15 santos-shares-plummet billion as investors absorbed the shock of losing what would have been Australia’s largest all-cash corporate buyout.
The breakdown centred on several critical sticking points. The XRG consortium would not agree santos-shares-plummet to acceptable terms that protected the value of the potential transaction for Santos shareholders, having regard to the likely extended timeframe to completion and the regulatory risk associated with the transaction.
Kevin Gallagher Faces Leadership Test
Kevin Gallagher, who has served as Santos’ Managing Director and CEO since February 2016, now confronts santos-shares-plummet one of his biggest challenges yet. Under his leadership, Santos had transformed from a struggling energy company into Australia’s second-largest independent gas producer.
Kevin Gallagher, Managing Director & CEO
Santos’ share price has more than doubled during Mr Gallagher’s tenure, generating a total shareholder return of 159% including santos-shares-plummet dividends, significantly outperforming broader market indices. However, the failed takeover represents a substantial setback for shareholders who were anticipating the premium exit.
The regulatory hurdles that ultimately derailed negotiations weren’t unexpected. Doubts were raised around whether the deal would pass santos-shares-plummet through Australia’s Foreign Investment Review Board and receive sign off from Federal Treasurer Jim Chalmers, given the sensitivity around gas prices and supply in the domestic market.
Mixed Operational Performance Adds Complexity
While grappling with takeover fallout, Santos reported challenging half-year results. Net income of US$439 million, down from US$636 santos-shares-plummet million a year earlier, and basic earnings per share falling to US$0.135 from US$0.196 highlighted the company’s operational pressures.
Despite earnings headwinds, Santos maintained progress on major development projects. Barossa LNG is ~97 per cent complete. The BW santos-shares-plummet Opal FPSO (floating production, storage and offloading) vessel arrived at the Barossa gas field and was successfully hooked up to the subsea infrastructure.
The company’s Alaskan venture also advanced significantly. Pikka phase 1 is ~89 per cent complete. Nineteen wells are now drilled santos-shares-plummet and completed at the end of the second quarter, positioning Santos for meaningful production growth.
Regulatory Battles Beyond Takeovers
Kevin Gallagher has become increasingly vocal about Australia’s regulatory environment. In May 2025, he drew controversy by comparing the santos-shares-plummet State to North Korea when discussing Victoria’s investment climate, reflecting broader industry frustrations with policy uncertainty.
“If I had a dollar to spend in PNG, Alaska or Australia today, for the same project … it would be PNG or Alaska,” Mr Gallagher said, highlighting his concerns about domestic investment conditions.
These regulatory challenges extend beyond state politics. The failed ADNOC deal required approvals across multiple jurisdictions including Australia, Papua New Guinea, and the United States – a complexity that ultimately proved insurmountable.
Market Outlook Remains Uncertain
Santos shares currently trade at significant discount to their recent peaks. Santos shares closed on Wednesday at $7.65, well below the takeover bid price, reflecting market skepticism about near-term catalysts.
Santos Share Price
Technical analysts suggest mixed signals ahead. Given the current horizontal trend, you can expect Santos Limited stock with a 90% probability to be traded between $7.71 and $8.21 at the end of this 3-month period.
The company’s fundamental position remains robust despite recent setbacks. Santos maintains one of Australia’s largest gas portfolios, with established infrastructure connecting major producing assets. The business remains robust, with a free cash flow from operations breakeven oil price under $35 per barrel for 2025.
Strategic Options Moving Forward
With the takeover avenue closed, Kevin Gallagher must refocus on organic growth strategies. The completion of Barossa and Pikka projects represents the most immediate value drivers, potentially delivering a 30% increase in production by 2037.
Santos also continues advancing its energy transition initiatives. The company operates Moomba Carbon Capture and Storage phase 1 project (Moomba CCS) continues to perform to expectations and achieved the milestone of one million tonnes (gross) of CO2 stored during the quarter.
The LNG market environment provides some optimism. “We continue to see very strong demand and premia for high heating-value LNG from projects such as Barossa and PNG LNG, as well as for reliable regional supply“, Gallagher noted in recent commentary.
What Investors Should Watch
Several key factors will determine Santos shares’ trajectory:
- Project execution: Successful startup of Barossa and Pikka phases
- Regulatory developments: Ongoing government relations and policy changes
- Alternative strategic options: Potential for other partnership or merger opportunities
- Commodity price trends: Oil and gas price movements affecting cash flows
- Dividend sustainability: Maintaining shareholder returns amid investment requirements
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The Bottom Line
Santos shares face a challenging period following the ADNOC deal collapse. While Kevin Gallagher’s track record suggests strong operational capabilities, the failed takeover removes a significant premium catalyst that investors had been banking on.
The company’s underlying assets remain valuable, particularly given Australia’s strategic importance in Asian energy markets. However, regulatory complexities and execution risks around major projects create near-term uncertainty.
For investors, Santos represents both opportunity and risk. The discounted valuation following recent declines may attract value-oriented buyers, while growth investors might await clearer project delivery milestones before committing capital.
FAQ
Q: Why did Santos shares fall so dramatically?
A: Santos shares experienced their biggest decline in five years after the $28.5 billion ADNOC-led takeover bid collapsed due to disagreements on key terms and regulatory risks.
Q: What are Santos’ major upcoming projects?
A: Santos is completing the Barossa LNG project (97% complete) in Australia and the Pikka oil project (89% complete) in Alaska, both expected to significantly boost production.
Q: How has Kevin Gallagher performed as CEO?
A: Since 2016, Gallagher has delivered 159% total shareholder returns, transforming Santos into Australia’s second-largest independent gas producer through strategic acquisitions and operational improvements.
Q: What regulatory challenges does Santos face? A: The company faces complex approval processes across multiple jurisdictions, domestic gas supply obligations, and evolving environmental regulations that impact investment decisions.
