(Bloomberg) -- Shareholders wiped A$3 billion ($2 billion) off the market value of Australian oil and gas group Santos Ltd. after a third attempted sale faltered on Wednesday, raising pressure on management to increase returns.

Shares in the gas producer fell as much as 14% at the start of Sydney trading, their biggest intraday decline since March 2020, following Abu Dhabi National Oil Co.’s decision to walk away from its $19 billion takeover bid. The stock was down 12% at 12:25 p.m. in Sydney, valuing the company at A$22 billion.

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A group led by Adnoc’s XRG unit dropped its proposal after failing to agree on key terms, ending months of talks. It marks the latest setback for Chief Executive Officer Kevin Gallagher, who has faced investor criticism for pushing an aggressive plan to boost output over higher dividend payouts.

“Given this is the third time Santos has failed to find a buyer, and its relatively poor investment performance, Santos management is likely to face increasing shareholder pressure to increase returns and pivot to a new strategy,” said Josh Ruciman, gas analyst at the Institute for Energy Economics and Financial Analysis. “This may include Santos divesting its LNG assets, but whether Santos’ current management is willing to do so is another question.”

In 2018, the Adelaide-based company spurned advances from US-based Harbour Energy Ltd., while talks with larger domestic rival Woodside Energy Group Ltd. broke down last year.

Shareholders are likely to renew calls for Santos to split its domestic and LNG businesses, Ruciman said. Santos has stakes in LNG export plants in Australia and Papua New Guinea and selling those may be attractive considering a looming glut in supply and uncertain demand, he added.

Santos expressed concerns about delays in reaching a so-called scheme implementation agreement to the consortium, which also included Abu Dhabi Development Holding Co. and Carlyle Group, the producer said. The start of two major development projects will support greater returns to shareholders, it said.

Adnoc’s decision was strictly commercial and reflected differences over valuation and tax, people familiar with the matter said. That echoes concerns over price in the failed coupling with Woodside in 2024. Furthermore, reports of a leak at the Darwin LNG plant weren’t disclosed until late in the process, the people said.

The deal’s collapse reinforces some investor concerns around the outlook of core assets such as the company’s LNG project in Papua New Guinea, said Citi analyst Tom Wallington. Shareholders will be “bruised” by the offer’s sudden withdrawal and question the negotiation tactics used in recent weeks, said Jarden Group Ltd. analysts Nik Burns and Joshua Mills-Bayne.

“The issue is the value is not there, particularly if an acquirer knows they will be held to account to clean up the rehabilitation liabilities of Santos in the decades ahead,” said Tim Buckley, founder and director of think tank Clean Energy Finance.

It is “too hard” to split off the company’s LNG business, said Matthew Haupt, portfolio manager at Wilson Asset Management.

“Gallagher can’t wear the blame for a failed deal,” he said. “Santos is in pretty good shape and should push on with operations, as well as generate the cash and start capital management.”

Several of Santos’ growth projects are nearing fruition. Barossa — criticized for being among the dirtiest gas projects in the world — is slated to start this month after Gallagher overcame legal challenges and secured approvals.

That will allow the company to resume production at its Darwin LNG plant, which shut in 2023 after an older gas field ran dry. Together with the Pikka oil project in Alaska, Barossa is expected to lift Santos’ output about 30% by 2027.

The deal’s collapse also followed opposition at home, with the Offshore Alliance — a group representing two major labor unions — urging the government this week to block the sale to Adnoc and keep Santos “in Australian hands.”

Other Australian energy stocks also fell on Thursday morning, including Woodside Energy Group Ltd., Karoon Energy Ltd. and Beach Energy Ltd.

--With assistance from Dan Murtaugh and Sybilla Gross.

(Updates with analyst comments, share price from first paragraph.)

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