Serica Energy plc said it was in negotiations for a possible merger with EnQuest plc which has made an all-share offer by way of a reverse takeover.
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Serica added that the proposed deal had “substantial potential benefits” including “increasing scale and diversification, unlocking significant synergies and providing a stronger platform for further growth”.
The possible transaction would result in returning capital to existing Serica shareholders who would hold a majority of the shares in the enlarged company.
The shares would be listed on the equity shares (commercial companies) category (ESCC) market of the London Stock Exchange.
EnQuest has until 5pm on 4 April to announce whether or not it intends to make a firm offer.
The company said that there was no certainty that an offer will be made nor of the terms.
Serica produces circa 34,600boe/d from 11 UK North Sea fields over which it has more than 80% operatorship.
Its portfolio includes the Bruce hub and the Triton FPSO, operated by Dana Petroleum, the Columbus and Orlando fields, and partnership in the Erskine field in the UK central North Sea.
The company additionally holds 30% in the Greater Buchan Area with operator NEO Energy owning 50%, and Jersey Oil & Gas plc retaining 20%.
EnQuest’s interests comprise the extension production sharing contract, comprising the PM8 and Seligi fields, in Malaysia.
In the UK, the group’s production assets include Magnus, Kraken, Golden Eagle, Greater Kittiwake Area, Scolty/Crathes and Alba oil fields.
EnQuest signed an agreement in January to acquire Harbour Energy’s business in Vietnam, which includes the 53.125% equity interest in the Chim Sáo and Dua production fields.
The company’s results showed 2023 production to 29 February 2024 averaging around 44,500 Kboed.
EnQuest is also involved in the UK mid-stream and decommissioning.