The Oil Search Limited (ASX: OSH) share price is 0.5% lower today, despite reports in the News Corp (ASX: NWS) press that the Papua New Guinea operating LNG exporter could once again be a takeover target.
The Australian newspaper is quoting a note from sell side broker Credit Suisse suggesting that Oil Search's French joint venture partner Total could be a bidder, alongside Chinese operators, or its old suitor Woodside Petroleum Limited (ASX: WPL).
Back in September 2015 Woodside lobbed a takeover bid that offered 0.25 Woodside shares for every Oil Search share that was rejected out of hand by the Oil Search board at the time, who claimed that the bid undervalued it.
Oil Search has some attractive assets in its PNG-based LNG production operations that are described as "world class" with potential for further development. The PNG location is also ideal for shipping to the energy-hungry markets of South East Asia and Japan.
However, Credit Suisse claims a few factors make a deal now more likely.
One point the broker raises is that the PNG government is no longer a shareholder in Oil Search, with its stake previously thought to be putting off Oil Search's management from considering a deal given the PNG government's power over its entire LNG operations in the country.
French gas giant Total is also already an existing partner in Oil Search's LNG operations in PNG and it's true that the energy sector has seen a number of huge mergers and acquisitions recently.
Including the US$10.4 billion sale by BHP Billiton Limited (ASX: BHP) of its onshore US shale oil assets and the US$70 billion Shell spent on acquiring natural gas business BG Group in 2015.
Oil Search's current market value is $11.2 billion and it's therefore within the range of only powerful multi-nationals with plenty of balance sheet strength. As such investors shouldn't hold their breath for a concrete bid at a large enough premium to lead to a deal.
