Aberdeen-based North Sea explorer and producer Silverstone Energy has offered 63.45p a share cash for Granby Oil and Gas.

Silverstone says it has already received irrevocable acceptances from owners of 42 per cent of AIM-quoted Granby for the deal, which would bring together Silverstone’s Victoria development and Granby’s Tristan NW projects in the North Sea’s southern gas basin. The price offered represents a 30.8 per cent premium to Granby’s depressed 48.5p close yesterday – though it is below Granby’s 2005 84p float price of less than half its 137.5p peak three years ago.

KBC Peel Hunt is advising Granby, whose chairman Ric Piper explains that rising exploration costs and competition for attractive projects mean that the company needs a ‘significant increase in overall scale and available capital’ to create material value growth ‘in a reasonable timeframe’. Matt Brister, chief executive officer of the private Silverstone, speaks of ‘real similarities and alignment’ between the two companies’ assets’ and suggests an increased asset base will provide ‘a strong platform to test our expanded prospect inventory’.

Granby’s shares have risen by 10p to 58.5p in response to the bid.

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Exploration Insights by Robert Tyerman			29/10/2007
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Granby in £9m placing			11/08/2006