Kevin Gallagher is in a race against time.

A veteran of Australia’s oil and gas industry, the Scotsman has earned acclaim for transforming Santos into the country’s second-largest fossil fuel producer in under a decade. But now Gallagher needs to speed up an ambitious growth strategy that would cement the firm as an international contender ranking alongside Woodside Energy Group and Eni — all while managing impatient investors and circling suitors.

If he falters, the $17-billion company’s lagging share price leaves it vulnerable as one of the most sought-after targets in the sector.

With a A$6 million ($4 million) “golden handcuff” agreement set to expire at the end of next year, with no obvious successor and new potential bidders already in the frame, shareholders are beginning to wonder whether the Santos boss can pull it off.

“Investors saw Gallagher as one of the best CEOs in Australia over the first five years of his tenure,” said Saul Kavonic, an energy analyst at Sydney-based MST Marquee. “But his reputation has been tarnished over the second half, as Santos delivered multiple downgrades. He was unable to deliver on all the promises he sold to the market, and the value of the acquisitions he made started to look more questionable.”

Gallagher’s plan to transform Santos hinges on boosting production volume by more than 50% by the end of the decade, which gives the company one of the strongest growth pipelines in Asia Pacific, according to Neil Beveridge, a senior analyst at Sanford C. Bernstein & Co. The expansion bets heavily on the region’s continued appetite for gas as it edges away from oil and coal.

But that promise has yet to translate into a revaluation, with Santos consistently under-performing peers. The stock is up about 8% in the three years through end-June — compared to 27% for Woodside and 83% for Exxon. Its legacy assets in Australia fail to impress investors looking for growth, its dividend and buyback yield has lagged, while slow progress on key new projects, including in Papua New Guinea, continues to weigh.

The result is that Santos has already had to rebuff multiple takeover attempts, including from Australian rival Woodside. More suitors have since emerged, most recently Abu Dhabi National Oil Co and Saudi Aramco, according to people with knowledge of the matter.

“We’re very frustrated by our share price,” Gallagher told investors in November, recognizing that the company is becoming an attractive quarry for predatory rivals.

For now, Gallagher is holding firm, analysts and industry executives say.

“Santos does not need this transaction,” he said in an internal video for staff from December, referring to talks with Woodside, which later broke down. “We have a very strong base business and that’s why there is interest in us.”

Santos did not reply to a request for comment.

A drilling engineer who first came to Australia to work with Woodside after a stint in the North Sea, Gallagher took over as chief executive officer of Santos in 2016 after leading Clough Ltd., an engineering firm. He arrived at a company in the doldrums, struggling to cope with a drop in oil prices, faltering shares and project delays.

Gallagher slashed drilling costs and boosted profitability from the company’s aging gas assets. This allowed the oil and gas producer to better weather the ebb and flow of the energy markets, delivering more consistent profits that won the trust of investors.

He set his sights on expansion through acquisitions — first with producer Quadrant Energy in 2018, and later acquiring Papua-focused Oil Search in 2021.

So when Gallagher was being considered for the top job at Woodside that year, the Santos board of directors agreed to a bonus deal to tie him in until the end of 2025. But that deadline is now close — and growth has faced hurdles.

One priority project for Santos is Barossa, which has been criticized for being among the dirtiest gas projects in the world. Gallagher has had to tackle challenging approvals, regulators and third-party litigation, which threatens to delay the project from its 2025 start. Without Barossa, Santos can’t resume production at its Darwin LNG plant, which shut last year after an older gas field ran dry.

Meanwhile, another — an expansion to an existing LNG export plant — has struggled to move forward. The Papua facility was upended by government negotiations, and then the pandemic. TotalEnergies SE, which will operate the facility, delayed the final investment decision to 2025, and analysts are predicting that this could be further pushed off — or scrapped altogether.

An activist investor, UK-based Snowcap Research, last year criticized the company’s aggressive upstream spending plan. It demanded instead stronger capital discipline and better returns. Other shareholders have urged the company to split its coveted LNG assets from oil operations in Alaska and its domestic gas business in Australia to cash in on higher valuations.

“We’d like to see a more robust capital return commitment from the company,” Snowcap co-founder Henry Kinnersley said by email, adding that after meeting Gallagher, the outfit was encouraged on discipline, but saw more to do.

Gallagher does not have to leave the company when his bonus deal expires next year, and could well remain. With no clear successor in place, a decision to move on would certainly leave Santos exposed. Staying would raise the stakes on delivery.

“It may well be that Kevin wants to see the plan through,” said Bernstein’s Beveridge. “We’re still very much in the middle of this plan. The execution is absolutely key.”