Santos ((STO)) has made a revised merger proposal to Oil Search of 0.6275 Santos shares for every Oil Search share held, up from the original offer of 0.589. While this is still a discount to Morgans' $4.60 target price, a merger will bring synergies and other benefits.

The broker imagines one post-merger scenario whereby the merged entity could seek to divest its interest in Alaska (ESG complexities). It's felt the proceeds could be used to support Santos' growth projects in Barossa and Dorado.

The Oil Search board has indicated it is likely to recommend the new merger proposal. Morgans retains its Add rating and $4.60 target price.

Sector: Energy.

Target price is $4.60.Current Price is $3.99. Difference: $0.61 - (brackets indicate current price is over target). If OSH meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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