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Perth-based Woodside and Adelaide-based rival Santos confirmed rumours of the talks, issuing statements to the ASX late on Thursday.
“In response to recent media speculation, Woodside confirms it is in discussions regarding a potential merger with Santos Ltd,” a Woodside spokesperson said.
“Discussions remain confidential and incomplete, and there is no certainty that the discussions will lead to a transaction.
“As a global energy company, Woodside continuously assesses a range of opportunities to create and deliver value for shareholders.
“Woodside will continue to update the market in accordance with its continuous disclosure obligations.”
A merger between the $57 billion Woodside and $22 billion Santos would have to be approved by competition regulator the ACCC.
Both companies have experienced enormous growth in recent years, with Woodside doubling in size when it took on BHP’s petroleum division in mid-2022.
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Santos acquired ASX-listed Oil Search in 2021, increasing its exposure to Papua New Guinean gas exports and adding an Alaskan oil field to its assets.