Santos and Oil Search have confirmed the terms of their proposed merger. 

The $21 billion Asian oil and gas producer formed by the deal will be led by Santos chief executive Kevin Gallagher and headquartered at Santos’ Adelaide base. 

The terms will see Oil Search shareholders receive 0.6275 new Santos shares for each of their shares. 

The takeover is still contingent on Santos securing approvals, including from the Papua New Guinea authorities and from shareholders in Port Moresby-based Oil Search.

Shareholders in the Papua New Guinea company will vote on the deal on November 29.

It will also be subject to the findings of an independent expert’s report on whether it stacks up for Oil Search shareholders.

“The merger will create a company with a balance sheet and strong cashflows necessary to successfully navigate the transition to a lower carbon future with the combination of Santos’ leading CCS [carbon capture and storage] capability combining with Oil Search’s ESG programs in PNG and Alaska to provide a strong foundation,” Mr Gallagher said.

The combined company should have annual production of about 116 million barrels of oil equivalent based on 2021 output.