Shares in Madagascar Oil (LON:MOIL) were suspended earlier today as the group revealed that the Ministry of Oil on the island said was interested in buying the company's licences.
Any deal would exclude the Bemolanga licence, which is part owned by international giant Total.
Madagascar warned: “There can be no guarantee that any price agreed for such an acquisition will be representative of the fair value of such assets.
“However, the company has obtained legal advice that all of its licences are valid and that the obligations on both parties are legally binding.
“Madagascar Oil intends to robustly defend its position.”
Today’s revelations will not sit well with investors who recently backed the group’s stock exchange listing.
The company was floated at 95p a share, raising £50.5 million to fund an ambitious drilling programme on its Tsimiroro project on the African island.
Today the stock was suspended at 75p.