Under the offer, Eskdale Petroleum, which currently owns 11.89% of Orchard’s issued shares, has valued the company at 68c per share, a 17% premium to the pre-offer share price.

News of the takeover bid sent OPL shares soaring 24.1% on the Australian Stock Exchange yesterday. Orchard closed at 74 cents yesterday and opened at 72.5 cents today. At 11am Sydney time this morning, it was trading at 73 cents.

Orchard in a statement told the ASX that it was currently in discussions with Crosby about the detailed terms and conditions of the proposed offer.

Until the board releases a formal recommendation, Orchard’s directors have recommended shareholders take no action.

Orchard has appointed Gresham Advisory Partners as its financial advisor and Allens Arthur Robinson as its legal advisor.

The Melbourne-based company has oil and gas production, development and exploration activities in California’s Sacramento and San Joaquin Basins.

It has nine projects covering more than 100,000 acres in the region. These projects include the South Belridge, Forbes Gas, Southeast Lost Hills and Turk Anticline, along with an exploration joint venture involving five projects with Aera Energy, which is jointly owned by Shell and ExxonMobil.

Analysts have predicted more takeovers and mergers among Australia’s juniors and mid-sized companies, although speculation has tended to focus on companies operating in Australia, Africa and Asia rather than on Australia’s large US-focused contingent.