While the company initially revealed the $6.88/share bid by Scepter Partners this morning, Energy News can reveal the offer was actually made on Tuesday, and the board of the South Australian oiler, which is vulnerable to opportunistic bids like this, met yesterday deciding to reject it as exactly that - "opportunistic".
It also didn't fit in with the options Santos is considering as part of its asset sales process, despite chairman Peter Coates telling Energy News as recently as last Friday that "all options are on the table", including selling the company.
He also said an equity raising, which the company has thus far avoided, was possible as one of a few options once the asset sales process is complete.
"The proposal is considered to be opportunistic in nature and does not reflect the fair underlying asset value of the company," Santos said this morning of Scepter's offer.
"The proposal was also subject to numerous conditions, some of which would be adverse to Santos' continued evaluation of other alternatives in its current strategic review process.
"Santos announced on August 21, 2015 that it would conduct a thorough strategic review of all options to restore and maximise shareholder value. The strategic review is ongoing, and will continue to consider all proposals which deliver appropriate value and certainty for shareholders."
Scepter describes itself as "a leading merchant bank and direct investment syndicate for sovereign wealth that is led by the former Blackstone Advisory Partners Asia team".
Key stakeholders include senior members of Asian and Gulf based ruling families and represents over $US14 billion ($A19.4 billion) in discretionary assets and over $100 billion in net worth of its core stakeholders.
Scepter was founded by Prince Abdul Ali Yil Kabier, who also founded BMB and drove its early growth where it became the first commercial multi-family office of ruling families in the Middle East and Asia who traditionally had been competitors.
BMB's assets were then spun out to Scepter, and Kabier then led the development of a new base of institutional investors who underscore the firm's proprietary capital.
Kabier's mother, Princess Masna, is the "Ambassador at large" for Brunei Darussalam and the sister of Sultan Haji Hassanal Bolkiah Mu'izzadin Waddaulah.
Another director, Prince Bahar Boliah, is also part of Brunei's ruling royal family and is an entrepreneur involved in high-end hotels in New York and Los Angeles.
Another Scepter director, Sheikh Juma al Maktoum, is the uncle of the Crown Prince of Dubai and a senior member of the Maktoum ruling family.
Scepter's $6.88/share offer, while a 26% premium on Santos' last closing price of $A5.44, is still below Morgans' $8.34 valuation of the South Australian oiler which just sent its first Gladstone LNG cargo to Korea last Friday.
That milestone marked Santos' transformation from a predominantly domestic gas supplier to an international LNG supplier to the still-growing Asian markets.
"We recently did different valuation scenarios, and today's bid does undercut the value in all the scenarios except if Santos was to raise $2 billion or more in new equity," Morgans senior resources analyst Adrian Prendergast told Energy News this morning.
"That dilution would be larger and undercut the current bid."
In other words, he said, the only way Scepter's offer would be "preferential" was if Santos raised $2 billion or more in equity.
"[Santos] has fallen on tough times because of big debt during a time of oil and LNG price weakness, but beyond that it's still a high-value collection of assets, and to me it stood out as a target, because even if you just wanted part of that asset base, you could still conceivably sell off the rest and retain what you wanted," Prendergast said.
Santos' $A8.8 billion debt was also clearly no disincentive to Scepter, and Prendergast said this actually reinforced Morgans' bullish view on oil and, by linkage, LNG prices, despite Woodside Petroleum CEO Peter Coleman saying in August that he could not see much price support for LNG spot over the next 18 months.
"If you believe that oil prices and LNG prices - which are linked - are going to recover over the coming years, then you quickly get to a point where cash flow from these assets as they're ramping makes [Santos'] debt very serviceable, and puts you in a position where you can deleverage the balance sheet anyway," Prendergast said.
"So obviously they have a positive view of the energy space.
"That's what our sector needs - pretty poignant reminders of the fact that these things are trading at deep value, and it confirms our bullish view of the eventual medium-term recovery in energy prices, especially oil. So we're very happy with the result [the bid itself, albeit rejected]."
He also expressed the hope that it could start a bidding frenzy, though similar calls were made by other analysts after Woodside's all-scrip bid for Oil Search, also labelled "opportunistic". Subsequent bids never eventuated, by Woodside or anyone else.
"It's very good, and hopefully it will encourage some competing interest in Santos, but it's certainly a value endorsement for the sector," Prendergast said of Scepter's bid for Santos.
The Australian reported this morning that Scepter, which has never invested in Australia before, was believed to be working with Highbury Partnership for its takeover bid of Santos.
