Serica Energy has agreed a recommended £146million takeover of Pharos Energy, marking the first major step in its strategy to expand internationally while continuing to invest in the UK North Sea.
The acquisition will establish operations in Vietnam and Egypt, increasing Serica's scale and diversification while boosting its reserves, resources and production.
The combined business is expected to increase 2P reserves by 13% to 156.8 million barrels of oil equivalent, increase 2C resources by 15%, and deliver an expected 2026 exit production rate of around 70,000 barrels of oil equivalent per day.
The deal values Pharos at approximately £145.7million and has been unanimously recommended by the Pharos board after it withdrew support for a rival offer from Ratio.
Chris Cox, Serica's CEO, said: "The acquisition of Pharos is a compelling opportunity to deliver a first step in our long-standing strategic objective of adding to the diversification of our business through international expansion, on terms that are accretive on a per share basis across all key metrics, with multiple embedded growth options.
"Upon completion the transaction will boost our reserves, resources and add materially cash-generative production, while at the same time delivering an attractive liquidity route for Pharos shareholders.
"Pharos brings a highly experienced regional team and an operating model that mirrors our own focus on cash generation funding both growth and returns.
"As we continue to invest in the UK North Sea, with a multi-well rapid return drilling programme set to begin in 2027, this presents a complementary platform from which to grow in South East Asia, a region with increasing energy demand that benefits from a supportive environment for upstream investment.
"With a robust balance sheet and material ongoing cash generation, we continue to analyse multiple opportunities to deliver further M&A and create significant value for shareholders."
The transaction remains subject to shareholder, court and regulatory approvals in Vietnam and Egypt and is expected to complete in the first half of 2027.