Santos said it would not proceed with its proposed acquisition of QGC after the Australian Competition and Consumer Commission blocked the bid on Tuesday.
But in the company's annual results announcement, managing director John Ellice-Flint said the need to lower emissions would boost demand for gas, and CSM would be the company's “new legacy business which will underpin sales volumes and cashflows for many decades.”
The company experienced a 65% increase in CSM production in 2006, integrating its Fairview acquisition, adding 380 PJ of 2P reserves and drilling 40 wells.
Despite these successes, the failure to take over QGC must still rankle.
“As a result of the ACCC’s decision announced to the ASX yesterday, Santos notes that the first condition of Santos’ offer to Queensland Gas Company … will not be satisfied by the acceptance deadline of 5 March 2007,” Santos said late yesterday.
“Santos therefore confirms that it does not intend to proceed with the QGC offer.”
Earlier this week, the ACCC said it opposed the proposed takeover because it would “substantially” reduce competition in the coal seam methane market, particularly in southern Queensland.
QGC rejected Santos' original offer in October, labelling the hostile bid as opportunistic and patently inadequate.
Santos approached the ACCC with a revised takeover proposal for QGC on January 30, which included undertakings that Santos said would preserve the competitive structure of the wholesale gas supply industry in southern Queensland.
The undertakings included the creation of a new company, NewCo, which would have post-acquisition rights to certain tenements, access to 100 petajoules of gas and some additional exploration and marketing support.
It was proposed the current QGC management would lead NewCo.
Santos at the time also increased its cash offer for each QGC share from $1.26 to $1.30.
But the ACCC was not satisfied the proposal would adequately resolve its substantial competition concerns.
QGC said previously that Santos' new offer was attractive but continued to recommend that shareholders accept the AGL deal.
In its original bid to take over QGC, the Santos Group succeeded in acquiring just 3.86% of its shares.
