Australian gas producer Santos Ltd said on Thursday it rejected a A$9.5 billion ($7.2 billion) takeover approach in August, sending its shares up 13 percent on speculation another offer was likely to emerge.

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Santos, Australia`s no.2 independent oil and gas company, said it rebuffed the approach from private equity-backed Harbour Energy as too cheap and has not received any further proposal.

It confirmed the August approach after a newspaper reported that Harbour, led by a former executive director of Royal Dutch Shell Plc, Linda Cook, was set to make a bid worth around A$11 billion.

"Santos confirms that it is not currently engaged in discussions with, and has not received a current proposal from, Harbour Energy," the company said in a statement to the Australian stock exchange.

However it said it had turned down a "confidential, non-binding conditional and indicative proposal" for a takeover from Harbour at A$4.55 a share in August.

The Australian Financial Review on Thursday reported that Harbour was lining up a bid of around A$5.30 a share, well above analysts` average price target of A$4.26, according to Thomson Reuters data.

Harbour Energy`s general counsel declined to comment.

"Linda was an architect of Shell`s LNG business in Australia and had overseen its development. It is therefore not surprising that Linda would be interested in getting involved in Australian LNG with Harbour," a source familiar with the matter told Reuters.

The interest in Santos comes at a time when gas demand is expected to soar in China, and a global LNG glut is expected to turn to a shortfall within five years as few new LNG projects are set to open after 2020.

Santos shares rose to a 15-month high of A$4.95.

Santos also rejected a A$7.1 billion proposal in Oct 2015 from a fund backed by the ruling families of Brunei and the United Arab Emirates, at a time when the company was saddled with nearly A$9 billion in debt.

It has since slashed debt and cut costs, positioning itself to benefit from rising oil and gas prices at its Gladstone liquefied natural gas (LNG) project, and gas assets in Papua New Guinea, Australia`s Cooper Basin and offshore northern Australia.

"Our confidence in Santos management continues to improve, particularly post the investor tour this week," said John Grace, co-head of equities at fund manager Ausbil, the sixth largest shareholder in Santos.

Santos expects to hold its gas output steady over the next several years, with growth to kick off in 2023 from projects in northern Australia and Papua New Guinea.

Harbour Energy was formed in 2014 by private equity firm EIG Global Energy Partners to make investments outside the United States.

Earlier this year Harbour bought Shell`s UK North Sea assets with Chrysaor Holdings Ltd for $3 billion, making it the largest independent oil and gas producer in the North Sea.

Its backer EIG has already invested in Australia, funding Senex Energy on a coal seam gas project and taking a 12 percent stake in the junior producer in a market that faces a gas supply crunch and soaring prices.

Santos` biggest shareholder is China`s ENN Ecological Holdings Co, which together with private equity partner Hony Capital holds 15.1 percent of the group. ($1 = 1.3179 Australian dollars)

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)