Energy producer Dragon Oil plans to make a near £500m bid for fellow oil firm Petroceltic to boost its presence in Algeria, where it was awarded new oil and gas licences last week.
Petroceltic said today that Dragon Oil intended to offer 230 pence a share, a 35% premium to its recent average stock price.
Petroceltic shares jumped over 26% in Dublin trade today.
The proposal is not a firm offer and remains to be approved by Dragon Oil's biggest shareholder.
Petroceltic said it would be willing to accept the offer once Dragon Oil's majority shareholder approved it, and if certain unspecified conditions were met.
One of Petroceltic's main assets is the Ain Tsila gas field in Algeria, a market where Dragon Oil recently obtained new drilling licences in a consortium with Italy's Enel. Dragon Oil's main production assets are in Turkmenistan.
"Petroceltic would bring Dragon Oil additional reserves in its focus areas," a Dragon Oil spokesman said, adding a deal would also diversify its portfolio and give it access to assets across the whole exploration and production cycle.
Petroceltic said any deal would be subject to approval by the Algerian government in relation to its Algerian assets.
It also advised shareholders to take no action as there can be no certainty that any offer will be made or as to the terms of any offer.
