SANTOS shares jumped 80c, or 5 per cent, to $16.93 yesterday on revived speculation of a bid from an international oil giant.

Sources pointed to a planned $US15 billion ($21 billion) merger between Canada’s Suncor and PetroCanada, which was announced earlier this week, as a possible catalyst for the talk.

Oil majors like Shell, BP and Eni also may be increasingly recognising the value of Santos’s Gladstone liquefied natural gas joint venture with Malaysia’s Petronas.

There has been plenty of speculation about a bid for Santos since the South Australian Government agreed to remove a 15 per cent cap on shareholdings.

Santos failed in its attempt to bulk up ahead of the abolition of the cap via a merger with Oil Search. The pair were in talks last year but a deal never emerged.

Santos is a complicated takeover target because it has three very different assets: coal-seam gas, the Cooper Basin, and offshore projects in Western Australia.

A demerger designed to attract a bid, such as the split between WMC and Alumina, is not believed to be under consideration.

And industry sources said they did not think a bid was imminent.

Tipton is the tip

After Arrow Energy’s decision to sell its 20 per cent stake in Pure Energy for $215 million this week, all eyes are on where it might spend its $700 million in cash reserves.

Arrow has said it will look at several options, but the analysts at JP Morgan reckon Beach Petroleum will see some of that cash in return for its 40 per cent stake in the Tipton West field.

The stake has been on the market since September, but the analysts said a sale from Beach was imminent and the company could get between $400 million and $500 million for the acreage.

Besides boosting its reserves by up to 30 per cent, Arrow could extract synergies from the deal because it already owns 42 per cent of the field.

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