SHARES in Irish oil and gas firm Petroceltic rose by more than a fifth yesterday after Dragon Oil made a near-£500 million approach for the explorer.
The Dubai-headquartered company said it intended to offer 230p a share, a 35 per cent premium to the recent share price of Petroceltic, which acquired Edinburgh-based Melrose Resources in 2012.
Dragon stressed the proposal was not a firm offer and that it remains to be approved by its biggest shareholder.
Petroceltic said it would be willing to accept the offer once Dragon Oil’s majority shareholder approved it, and if certain conditions were met.
The Dublin-based firm’s largest shareholder is oil and property tycoon Robert Adair, who founded Melrose Resources and who could be in line for a payout of £94.6m for his stake of around 23 per cent. Shares rose by 22.4 per cent, or 40p, to close at 218.5p.
One of Petroceltic’s main assets is the Ain Tsila gas field in Algeria, a market where Dragon recently obtained new drilling licences in a consortium with Italy’s Enel. Dragon’s main production assets are in Turkmenistan.
“Petroceltic would bring Dragon additional reserves in its focus areas,” a Dragon spokesman said, adding a deal would also diversify its portfolio and give it access to assets across the whole exploration and production cycle.
Analysts at BMO Capital Markets said: “We do not necessarily see this as a catalyst for more mergers and acquisitions in the sector but this could be the first deal in a while that demonstrates the value in the sector.”
Petroceltic, which acquired Melrose Resources in a merger deal which valued it at £165m, pointed out that any deal would be subject to approval by the Algerian government in relation to its assets there.
Earlier this year the company announced plans for a $100m (£60m) placing to accelerate its exploration programme in Kurdistan and advance plans for recently acquired licences in Egypt and Greece.
In August the company suspended operations in Kurdistan amid fears that oilfields there could fall into the hands of Islamist militants.
• Faroe Petroleum, the Aberdeen-based explorer, has been awarded three new licensing options in the Celtic Sea by the Irish government. The options are all situated within 75km of the south coast of Ireland.
Graham Stewart, chief executive of Faroe Petroleum, said: “We now have the opportunity, at low cost, to screen potentially significant exploration targets using our knowledge and experience in seismic reprocessing and interpretation.
“Faroe has had considerable exploration success and aims to transfer these skills and knowledge to the Celtic Sea area of Ireland. We very much look forward to working with the Irish authorities as we execute the work programme over the next two years.”