Nostrum Oil & Gas (LON:NOG) has publicly urged the board of Tethys Petroleum (TSE:TPL LON:TPL) to accept its takeover offer after talks stalled.
The proposal is worth C$0.147 per Tethys share, plus a further US$15mln in additional interim loan funding.
Nostrum said while discussions have been constructive, the expectations of Tethys’ board, in particular over the terms of the interim funding, are unrealistic given its current financial circumstances.
As a result, Nostrum and Tethys have been unable to reach agreement on the terms of the proposed transaction.
Nostrum added that it believes while the talks have been underway the underlying financial position of Tethys has continued to deteriorate and if a deal is not agreed shortly, the amount of interim funding needed is likely to rise.
If agreement can be reached shortly a deal may be possible by the end of 2015, said Nostrum.
The proposed deal has a number of conditions related to Tethys' assets in Kazakhstan, while there is a break fee of US$1mln payable to Nostrum if an exclusivity period is breached before it runs out on 25 September.
Tethys said it noted the announcement made by Nostrum, adding that it "continues to consider the offer and the associated conditions, and is doing so whilst fulfilling its duty of care and obligations to all stakeholders, creditors and shareholders included".
Shares in Tethys added 7.89% on the day to stand at 5.125p each.