Santos, an Australian oil and gas producer, has announced the receipt of a non-binding indicative proposal from a consortium led by the Abu Dhabi National Oil Company (ADNOC) to acquire all the ordinary shares of Santos through an arrangement process.

The consortium, which includes ADNOC's investment arm XRG, Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle, proposed $5.76 (A$8.89) per share, representing a 28% premium over Santos' closing price last Friday.

The estimated value of the proposal is $18.7bn, according to a report from Reuters.

The consortium's offer follows two undisclosed proposals in March. The first was made on 21 March, offering $5.04 per share in cash, while the second was submitted on 28 March, offering $5.42 per share in cash.

The XRG-led consortium aims to acquire key assets from Santos, including the Gladstone LNG (liquefied natural gas) and Darwin LNG operations in Australia, stakes in PNG LNG and the undeveloped Papua LNG project.

Santos' assets in Papua New Guinea are highly valued, and the company is also progressing with the Pikka oil project in Alaska, expected to commence production by mid-2026.

The indicative proposal is contingent upon the successful completion of confirmatory due diligence by the XRG Consortium, as well as the negotiation and execution of a mutually agreed scheme implementation agreement (SIA) with Santos, adhering to standard terms and conditions.

The XRG Consortium has expressed that it requires Santos to enter into a process and exclusivity deed, which will include exclusivity restrictions, among other provisions, before it proceeds with confirmatory due diligence and the negotiation of the SIA terms.

Santos plans to negotiate the terms of both the process and exclusivity deed and an accompanying confidentiality deed with the XRG Consortium.

The Santos Board has confirmed that, pending the establishment of acceptable terms for a binding SIA, it intends to unanimously recommend that Santos shareholders vote in favour of the potential transaction.

This recommendation is contingent upon the absence of a superior proposal and the conclusion of an independent expert that the potential transaction is fair, reasonable and in the best interests of Santos shareholders, according to the company.

The implementation of the scheme under the SIA will be subject to customary regulatory and corporate approvals, among other requirements.

XRG has committed to retaining Santos' headquarters in South Australia, potentially easing regulatory concerns.