Middle East energy firm Dragon Oil said today it was mulling a takeover offer for Scottish explorer Bowleven.
Edinburgh-based Bowleven’s shares soared surged 70% to £1.26, closing up more than 60% at £1.21.
Dubai-headquartered Dragon is 52% owned by the Emirates National Oil Company.
It is looking to expand its reach beyond Turkmenistan, which accounts for all of its current production.
The firm also has a large cash pile, which it has built up from rising production and on higher oil prices.
Declaring its interest in Africa-focused Bowleven, Dragon said it was “in the preliminary stages” of exploring a possible offer.
Alternative investment market-listed Bowleven said only it noted the announcement and would make any further announcement “as may be required” in due course.
Bowleven and Dragon both declined to give more details or say whether talks were already underway.
Analysts at Bank of America Merrill Lynch said Dragon had an £880million-plus cash pile to make acquisitions and was looking at deals in the range of £126million-£316million.
Oriel Securities analyst Vugar Aliyev said acquiring Bowleven would represent a major strategic change for Dragon and he viewed the potential deal as “neutral to slightly negative”.
Bowleven has made a series of oil discoveries off the coast of Cameroon, none of which have to date been developed, meaning it does not have production.
Tullow Oil, another London-listed oil company, was rumoured to be lining up a bid for Bowleven before Dragon made its announcement.