Australian independent Santos Ltd. is set to bolster its global portfolio through a takeover of Papua New Guinea-based Oil Search Ltd.

The deal announced Monday would give Santos a foothold in the Papua New Guinea liquefied natural gas (LNG) scene, considered some of the lowest-cost projects in the world. Oil Search is a partner in the ExxonMobil-operated PNG LNG project as well as the TotalEnergies SE-led Papua LNG development, which is expected to reach a final investment decision in 2023.

Santos would also gain Oil Search’s operating stake in the Pikka Unit on the North Slope of Alaska, which contains the massive Nanushuk conventional oil play.

The announcement follows Oil Search’s rejection of Santos’ initial offer, which had implied a transaction price of...