Pharos Energy has agreed a recommended acquisition by Israel-based Ratio Petroleum Energy in a deal that values the London-listed oil and gas producer at £124.3m.

Under the terms of the agreement, eligible shareholders will receive total value of up to 28 pence per share, comprising just over 23 pence cash from Ratio, a four pence special dividend funded by Pharos and the previously declared almost one pence FY25 final dividend.

The Pharos board unanimously backed the transaction, expected to complete in H1 2027, and said it delivers immediate and certain value for shareholders while reducing the execution, commodity price, operational, country and financing risks associated with remaining independent.

"Over the last 23 months, the team has put Pharos in a position where this all cash offer is possible," said Pharos CEO Katherine Roe, who added that future growth, including exploration in Vietnam, would require “significant investment from a scaled operator”.

Pharos operates producing, development and exploration assets across Egypt and Vietnam. The company said that despite recent operational progress — including licence extensions in Vietnam, improved fiscal terms in Egypt, debt repayment and recovery of receivables — its mature asset base and limited scale constrained future growth opportunities.

For its part, Ratio said the acquisition would create a stronger exploration and production platform with broader geographic exposure and improved access to low-cost capital, supporting further investment and development across the combined portfolio.

"A combination of Ratio with Pharos makes strong strategic sense, creating a balanced production and exploration company with the reputation, scale, balance sheet strength and technical capabilities to unlock further opportunities from a combined quality asset base. Together with the support of the wider Pharos Group, the enlarged company shall be a platform for future value growth," said Itay Raphael, CEO of Ratio.

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