Following weeks of speculation, Medco has agreed to pay 55p for each Ophir share, an offer shareholders have been told they should accept.
“We are pleased to announce a recommended transaction with Medco,” said Ophir’s chairman Bill Schrader.
“The Ophir board believes that the Medco offer reflects the future prospects of Ophir's high-quality assets, as reflected in the premium of 65.7% to the closing price of 33.2p on 28 December 2018.
“Consequently, the Ophir board intends to recommend unanimously the transaction to Ophir shareholders.”
Medco chief executive Roberto Lorato added: “The enhanced scale, diversification and growth opportunities of this acquisition would create benefits for employees, partners and host countries, and further strengthens Medco's position as a leading independent oil and gas player in Southeast Asia.”
The acquisition of Ophir, which produces around 25,000 barrels of oil equivalent per day (boepd) in south-east Asia, would bring Medco’s total production in the region to over 100,000 boepd, making it the seventh-largest upstream producer there, excluding national oil companies.
Long-term investors to get some money back
The deal will be put before shareholders in the coming weeks and is subject to conditions that include Ophir receiving clearances relating to a project in Tanzania and not losing various interests in Thailand.
With the bid having the support of the board, Ophir shareholders are expected to wave it through.
It will give long-term investors a chance to claw back some of their losses over the past five years, during which the firm’s share price has slumped on the back of the 2014 oil price crash and its failure to get a liquefied natural gas project in Equatorial Guinea off the ground.
Shares rose 6.6% on Wednesday morning to 54p, just below the offer price.