Woodside Energy (NYSE:WDS) and Santos (OTCPK:STOSF), Australia’s major oil and gas companies, have decided to terminate discussions for a potential merger. The merger had the potential to create a combined company valued at approximately A$80 billion ($52.24 billion).

CEO Meg O’Neill declared that Woodside Energy (WDS) is committed to pursuing only those deals that would prove to be value accretive for its shareholders. O’Neill stated, “While discussions with Santos (OTCPK:STOSF) did not result in a transaction, Woodside (WDS) believes that the global LNG sector holds significant potential for value creation.”

The news resulted in a 0.5% surge in Woodside’s Australian-listed shares, while Santos witnessed a decline of 5.8%.

Santos expressed that “sufficient combination benefits were not identified to support a merger that would be in the best interests of Santos shareholders.” The company highlighted its strong balance sheet and its ongoing efforts to explore options to deliver value to its shareholders.

The discussions for the merger commenced in December, coinciding with both companies facing production hurdles, high capital spending, and regulatory obstacles for their ongoing projects.

The merger, if realized, would have significantly consolidated Australia’s independent LNG sector, positioning it as a major player with LNG volumes comparable to that of BP.

Fund manager Allan Gray Australia, which holds a stake of around A$700 million ($456.8 million) in Woodside (WDS), recently urged the energy firm to walk away from the deal talks rather than pay a premium that would erode the value of the company.