Dragon Oil weighs up offer for Bowleven

Dragon Oil (DGO) said on Friday that it may make an offer for Bowleven (BLVN).

Caspian Sea-focused Dragon Oil said [it] "notes the recent movement in Bowleven's share price and confirms that it is in the preliminary stages of exploring a possible offer for all of the issued and to-be-issued share capital of Bowleven".

It added that its comments do not constitute an announcement of a firm intention to make an offer.

Takeover and merger rules now mean that Dragon Oil is required to go firm one way or the other on its plans before 17:00 GMT on 16 March.

Bowleven's shares jumped 42% higher on the news, while Dragon Oil stock was flat.

Bowleven acknowledged the announcement in a brief statement and said it will "make any further announcement as may be required in due course."

Last month's drilling update from Dragon revealed a successful start to its 2012  programme including the "great potential" of its Dzheitune field on the Cheleken Contract Area, offshore Turkmenistan.

The Dubai-headquartered firm also said that its year-end production rate was 71,751 barrels of oil per day (bopd), ahead of the 70,000 bopd target.

West African-focused oil and gas explorer Bowleven unveiled a new discovery at its Sapele-3 well, offshore Cameroon in November. But this did not please everyone as analyst Richard Griffiths at Evolution decided at the time to downgrade his rating of the firm from ‘buy’ to ‘neutral’.

The broker said the update from Bowleven "leaves more questions than answers” as it cut its target price from 190p to just 80p, although it noted that this is more to do with timing issues rather than potential.

Matterley Asset Management's George Godber thinks the Turkmenistan-focused giant is "fascinating". Find out why in: Analyst focus on Dragon Oil.