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Dragon in talks to buy oil rivals

Two of the country's biggest oil exploration companies are in takeover talks.

Stock exchange listed Dragon Oil has confirmed that it is in talks regarding a possible €628m takeover of its rival Petroceltic.

Shares in Petroceltic shot up 21pc to 216.75 pence each in London after Dragon Oil said it could pay 230 pence a share to buy the Dublin-based company, but the stock remained below the proposed offer price.

The directors of Petroceltic said they will support the Dragon Oil offer.

Dragon Oil "would be getting a good deal" if the proposed offer is accepted, analysts from Peel Hunt said in note.

But the talks could flush out other offers for Petroceltic at as much as 250 pence a share, Peel Hunt said.