Cairn Energy's (LSE: CNE) exploration subsidiary Capricorn Energy Limited surprised the market this morning by announcing it had made cash offers for two AIM listed oil and gas exploration companies with acreage offshore Tunisia.
Capricorn has offered approximately £23.4 million, or 13 pence per share for Plectrum Petroleum (AIM:PPE), and 8% premium to the closing share price yesterday. Plectrum is focused on deep and ultra-deep water exploration and has interests in blocks in Tunisia, Peru, Australian and West of the Shetland Islands, UK.
In the same breath Capricorn also said it had made a £14.9 million cash offer for MedOil (AIM:MDL), or approximately 23 pence per share - a 19% premium to the closing price yesterday. MedOil's key asset is a 100% interest in the Louza Permit, offshore Tunisia.
Capricorn stated that the combined acreage of Plectrum and MedOil would give it a material oil exploration portfolio in Tunisia.
Shares in Plectrum and MedOil rose to reflect the offer price, though many investors will no doubt be disappointed that while the offers were at a premium to the prevailing share prices of both companies neither offer was close to levels reached previously.
The cash offers will also increase speculation of continued merger and acquisition activity in the oil and gas sector as smaller companies struggle to fund exploration and development of high risk exploration acreage.