Chatting with various analysts and executives at the recent APPEA Conference, PNN found a consensus that the Opes Prime debacle would only add to the difficulties explorers already had in finding equity funding since the subprime crisis hit.

The feeling was there would be pressure for rationalisation and consolidation, particularly among juniors, but also among mid-tier companies.

No sooner had eastern states delegates unpacked their bags on returning from Perth when news broke that Australian Worldwide Exploration and Arc Energy were having serious discussions on a possible merger.

Then late last week, junior players Drillsearch and Great Artesian also announced a merger.

Having been pipped at the post by Nexus Energy in the race to merge with Anzon Australia, Arc seems determined to amalgamate with someone, or at least to explore every option available.

An AWE-Arc merger would create an even larger entity than the Nexus-Anzon amalgamation, a $2 billion-plus company with strong management and technical teams, and a collection of producing assets, all of which - barring Cliff head - offer exploration upside.

In the case of BassGas and Casino, this upside is considerable.

Both companies also have some interesting exploration plays. A couple of weeks ago, AWE's Lengo-1 wildcat in Indonesia made a significant gas discovery.

Managing director Bruce Wood says he is convinced more finds will be made in that area, leading to a new hub for the company.

Arc's exploration acreage in Western Australia's Canning Basin is more enigmatic. Early results have been promising, although not commercial, but nobody really knows what to expect from this region.

Some pundits have picked a merged entity to shed the Canning assets, but Arc believes strongly in this frontier basin and PNN believes it is unlikely that the company would be negotiating with a player that didn't value this potential.

In addition, in a recent presentation to journalists Wood repeatedly emphasised the importance that AWE placed on exploration.

PNN expects a post-merger AWE would give the Canning a fair try before considering releasing what is, after all, an almost basin-wide acreage position.

The Drillsearch-Great Artesian merger is more modest. It would lead to a $70 million company - still very much a junior - with a stronger position in the Cooper.

Drillsearch has a substantially larger market cap ($51 million) than Great Artesian ($19 million).

But oddly enough, the merged entity's board is likely to be dominated by Great Artesian directors.

Drillsearch currently has no managing director or chief executive and several board members resigned late last year following the departure of managing director Philip Kelso.

Great Artesian's Managing Director David Williams will assume the office of managing director of the new company. Peter Simpson, the executive chairman of Drillsearch, will remain as chairman of Drillsearch but in a non-executive capacity.

Fat Prophets analyst Gavin Wendt told Australian Associated Press that at least one other company, Enterprise Energy, had run the ruler over Drillsearch "quite closely".

Analysts agree that more mergers are likely, and they may not be confined simply to the mid-tier companies and the juniors.

Given its attractive reserves position, pipeline of intriguing exploration plays and equity in one existing and two proposed LNG projects, Santos is seen as being a takeover target once its 15% shareholding cap comes off in November.

The question is, is its management comfortable with the idea of a takeover?

If the answer is yes, then what can be done to maximise the company's value between now and November?

If the answer is no, then what can be done to protect the company against a takeover?

In both cases, the answer seems to lie with the proposed Gladstone coal seam methane-to-LNG project.

The main problem that the market has with this project is that Santos has failed to introduce a strategic partner.

It's widely agreed that the scheme needs one or more large partners with expertise in LNG project management, production and marketing

In early February, Queensland Gas Company transformed perceptions about its potential by introducing such a partner - BG Group, one of the world's leading LNG distributors - into its own CSM-to-LNG project.

If Santos brought in a partner of this calibre, its share price would benefit significantly, increasing the price paid in any takeover.

But bringing in a partner that took a strategic stake in Santos could also safeguard the company against a takeover.

Santos and BG are believed to have discussed a partnership in Gladstone LNG last year, before BG lost patience and approached QGC to do a deal.

Indeed, judging from comments in QGC's latest half-yearly report, the coal seam methane producer did not believe it was ready to move into LNG until it was approached by BG.

QGC's move into international gas pricing was meant to be "some time off", according to managing director Richard Cottee.

"Our goal could have been realised through supplying gas for export urea, or a number of other gas-based products," he wrote.

"However, in the half year, real relationships were struck with BG Group, not only an LNG market leader but also a company with a remarkably similar culture to QGC.

"Out of this relationship our Long-term Natural Growth (‘LNG') strategy evolved."

Santos's lost opportunity was QGC's lucky break. Can Santos now do its own deal with BG or must it find another partner?

That depends how much Australian LNG BG wants. The company is serious about building its pacific basin business and is selling LNG from the Middle East and the Atlantic into the East Asian spot cargo market, so a second Australian LNG train might be welcome.

Combining the QGC and Santos LNG projects would create enormous synergies, and if BG - or any other Gladstone LNG partner - acquired shares in Santos as part of the deal, the introduction of a strategic shareholder would make any takeover attempt that much more difficult.

Of course, that doesn't mean that down the track, Santos's new partner couldn't itself make a move on Santos.

But BG, or any other company, would not be able to merge Santos and QGC. The Australian Competition and Consumer Commission has already made it clear that any such move would be unacceptable.

Alternatively, Santos could also retain a large degree of self-control through a friendly merger with a similar-sized company.

It is widely believed that late last year and early this year, Santos and Oil Search were in serious discussions about a possible merger, but that now seems to be off the cards.