Serica Energy, a UK-based oil and gas company, has agreed to acquire compatriot Pharos Energy for £145.7 million (more than €170 million), with Pharos withdrawing its recommendation for a bid from Israeli company Ratio Petroleum.
The acquisition is said to be in line with Serica Energy’s long-term strategic goal to increase its size and diversify through the addition of overseas operations with a focus on regions that benefit from a supportive regional environment for upstream investment and increased energy demand as well as providing space for further growth.
The deal will expand the company’s operations in Vietnam and Egypt, increasing its primary 2P reserves by 13% to 156.8 million barrels of oil equivalent and 2C resources by 15% to 129.4 million barrels of oil equivalent, and raising its expected 2026 production rate to approximately 70,000 barrels of oil equivalent per day.
Catherine RowePharos Energy CEO said: “As we announced in our recent trading update, the company is benefiting from strong operating momentum. At the same time, Pharos’ Board of Directors is pleased to recommend this offer from Serica, which provides shareholders with a material cash premium over the ratio offer.”
In addition to Pharos’ well-established in-country organizations and host government relationships in Vietnam and Egypt, the combined group will combine Serica’s proven subsurface capacity with Pharos’ mature production assets.
The combined group will also receive approximately $45 million of cash held by Pharos as of June 30, and will benefit from a strong balance sheet, with material liquidity, with the ability to improve the delivery of tank fill opportunities in Vietnam and Egypt, while continuing to seek an off-farm partner for the high-impact, ready-to-drill prospect in Blocks 125 and 126 in Vietnam and eliminating cross-corporate overhead costs, Pharos Energy said.
In line with the acquisition, Pharos Energy’s Board of Directors has unanimously decided to withdraw its recommendation regarding the Ratio Petroleum offer and intends to recommend the acquisition by Serica to shareholders. Therefore, the Board of Directors proposes to postpone the shareholders’ meetings held on August 17 until further notice.
“The acquisition of Pharos is a compelling opportunity to provide a first step in our long-term strategic goal of adding further diversification to our business through international expansion, on accretive terms on a per-share basis across all key metrics, with multiple growth options built-in. Upon completion of the transaction, it will strengthen our reserves and resources and add material cash generating production, while at the same time providing an attractive liquidity pathway for Pharos shareholders.” He said Chris CoxCEO of Serica Energy.
“Pharos has a highly experienced regional team and an operating model that reflects our focus on generating cash to fund growth and returns. As we continue to invest in the UK North Sea, with a fast-return multi-well drilling program scheduled to commence in 2027, this represents a complementary platform from which to grow in Southeast Asia, a region with increasing energy demand and benefiting from a supportive environment for upstream investment. With a strong balance sheet and ongoing material cash generation, we continue to analyze multiple opportunities to deliver further M&A creation Great value for shareholders.”
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