The Oil Search Ltd (ASX: OSH) share price has dipped into the red during Wednesday's session.
Oil Search shares are now exchanging hands at $3.80 apiece, slightly down from the opening price of $3.86.
The company faced a series of questions regarding its proposed merger with Santos Ltd (ASX: STO) on its FY21 earnings call on Tuesday.
Let's investigate further.
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What did Oil Search say?
Oil Search revealed during its FY21 earnings call that Macquarie Bank, Goldman Sachs and Allens were each advising the company regarding the Santos merger proposal.
Recall that the company agreed to Santos' revised merger proposal on 2 August. This would see each Oil Search shareholder receive 0.6275 Santos shares for each Oil Search share held.
The revised offer was bumped up from 0.589 Santos shares. This would see Oil Search shareholders retain 38.5% of the newly formed group.
Oil Search is prohibited from engaging with other parties to solicit a rival bid. This is part of the due diligence process.
On the call, Oil Search interim CEO Peter Fredricson was pushed on whether management had sought alternative options to the merger. For instance, Credit Suisse analyst Saul Kavonic queried the potential sales of the company's Alaska and Papua New Guinea LNG interest.
Fredricson explained that it hadn't. Rather, it had focused on "running the business in a way that delivers value to our shareholders."
What else happened?
Oil Search's top executive was grilled further on the particulars of the deal. Especially related to Santos' involvement in discussions on Oil Search's operations with third parties.
Pushing back, Fredricson stated that Santos has had zero "direct communication with anybody in respect of what (Oil Search does)".
However, the call left some unimpressed. Allan Gray analyst Simon Mawhinney was present on the call. He told yesterday's Australian Financial Review that, at "every turn shareholders have been let down".
Additionally, Saul Kavonic told the AFR that many Oil Search investors would be wondering why the company "hasn't even tried to pursue other options," instead of just taking the "first suitor to turn up".
Despite this sentiment, Peter Fredricson told participants on the call that Oil Search had originally rejected the Santos deal "as solely unacceptable in the context of value".
Oil Search share price snapshot
The Oil Search share price has had a choppy year to date, posting a return of just 2.4% since 1 January.
Despite this, Oil Search shares have climbed 26% into the green over the last 12 months.
This has outpaced the S&P/ASX 200 Index (ASX: XJO) return of about 25% over the past year.
