Fossil fuel giant Santos has rejected a $7.1 billion takeover offer from an elite syndicate of Middle East and Asian ruling families.

Santos issued a statement to the ASK this week saying it had received a $6.88 per share offer from Scepter Partners – a Bermuda-based investment vehicle for ultra-high wealth investors.

Santos labelled the bid as “opportunistic in nature”, but said it “did not reflect the fair underlying asset value of the company”.

“The proposal was also subject to numerous conditions, some of which would be adverse to Santos's continued evaluation of other alternatives in its current strategic review process,” the statement said.

The company’s share price leapt up by nearly 20 per cent on the news, but eased back to a 12 per cent increase in pre-lunch trading on Thursday.

Despite the big bid, Santos has had a rough time lately, marred by tumbling oil and gas prices and negative press about emissions-intensive energy sources.

It is also facing mounting debts from its 30 per cent stake in the $22 billion GLNG project in Gladstone, which only made its first gas shipment to Asia last week.

Analysts say the sluggish oil price should see Santos’ debt peak at around $9 billion, and suggest it needs to raise about $2 billion — either by asset sales or capital raising — to balance its books.

But Santos still has other jewels in its crown, including a 13.5 per cent stake (worth about $7 billion) in the PNG LNG project operated by Oil Search.

The would-be buyers Specter Partners are an intriguing and secretive group, describing itself as a syndicate of ultra-high-net-worth industrialists, sovereign wealth funds and Asian and Gulf ruling families.

Key investors include the royal family of Brunei, in a group that claims to have $US14 billion in assets as well as the backing of over $US100 billion in net worth its stakeholders.

Specter was formed “to acquire large cap assets with a focus in natural resources, infrastructure, real estate and media and telecommunications”.