The Oil Search Ltd (ASX: OSH) share price has been on a bumpy ride recently.
Shares in the oil and gas company have climbed 5% higher since a merger announcement a couple of weeks back.
So, what’s the outlook for the Oil Search share price?
Forecast for Oil Search shares remains cloudy
Shares in Oil Search have stumbled along since news of its merger.
The oil and gas company announced that it has entered into a definitive agreement to merge with fellow energy company Santos Ltd (ASX: STO).
According to Oil Search’s management, the merger could provide a stronger balance sheet, access to broader capital markets, and growth projects.
Despite the promising potential, shares in Oil Search face some uncertainty as the deal pends approval.
Several terms need approval before the merger can go ahead, including regulatory hurdles and shareholder approval.
In addition, many of the prospective growth projects are in Papua New Guinea.
As a result, the PNG government holds veto power over the deal, which could be a potential deal-breaker.
More on Oil Search’s merger
As part of the all-scrip transaction, shareholders will receive 0.6275 new Santos shares for each Oil Search share held.
Upon completion of the merger, Oil Search shareholders will own approximately 38.5% of the merged entity.
Overall, the new combined company will boast a forecasted market capitalisation of $21 billion.
The formal announcement of a merger between Oil Search and Santos is not news to many investors.
Oil Search received a non-binding merger proposal from Santos in early July.
Since 6 August both companies have been carrying out due diligence on each other.
Snapshot of the Oil Search share price
The Oil Search share price has stumbled along in 2021.
Since the start of the year, shares in the oil and gas company are trading 3.5% higher.
In addition to the merger announcement, shares in Oil Search recently received a boost following a positive outlook for oil demand.
Oil Search shares closed Friday’s trading session at $3.84.
The post The Oil Search (ASX:OSH) share price has jumped 5% since the merger announcement. What’s next? appeared first on The Motley Fool Australia.
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More reading
- 5 things to watch on the ASX 200 on Thursday
- Here are the 3 most heavily traded ASX 200 shares so far today
- Why the Woodside (ASX:WPL) share price is leaping 6% today
- ASX 200 energy shares are leading the market on Tuesday
- ASX 200 rises, Santos and Oil Search merge
Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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