UPDATE 1.20pm: Shares in Perth-based Aurora Oil & Gas have soared 56 per cent after Canada's Baytex Energy launched a friendly $1.84 billion bid for the Texas-focused shale oil and gas player.
Aurora's board has welcomed the $4.10-a-share offer and entered into a scheme of arrangement for the takeover to be effected.
The offer represents a 55 per cent premium to the company's volume weighted average trading price for the past week.
Aurora's directors say they intend to sell their collective 5.5 per cent stake in the company into the Baytex offer.
Aurora executive chairman Jon Stewart said while the board was confident of the company's future growth outlook and existing position, it believed the offer represented an attractive opportunity for shareholders to realise value at a significant premium to the current share price.
It remains to be seen whether Baytex's offer will flush out any other potential bidders in the hot US shale gas market.
Aurora is listed on both the Australian and Toronto stock exchanges but is focused on developing and producing oil and gas in Texas' Eagle Ford Shale.
The deal is subject to approval from Australia's Foreign Investment Review board, shareholders and a favourable report from an independent expert.
Aurora shares soared $1.47, or 56.11 per cent, to $4.09 at the close.