Shares in Soco International defied the wider market slump, surging 40 per cent at one point yesterday after the oil explorer confirmed that it had received a bid approach.

The FTSE 250 company, which has interests in Vietnam, Thailand and Africa, said in a statement that it had received a preliminary approach about the sale of the bulk of its portfolio of assets.

Although it declined to identify the bidder, Sinochem Petroleum, the Chinese state-controlled oil and petrochemicals group, is thought to have expressed an interest in acquiring Soco’s share of two offshore exploration blocks in Vietnam, which represent 63 per cent of Soco’s total proven oil reserves.

Soco’s shares rose to close more than 100p up at £12.24 after news of the approach, valuing the group at £911 million – indeed, they rallied by up to 40 per cent at one point.

News of the bid came as the price of oil plunged by more than $7 a barrel to less than $80 for the first time in a year, amid mounting expectations that global oil demand is wilting as the economy falls into recession. The International Energy Agency also trimmed its forecasts for world oil demand growth this year to 0.5 per cent, its lowest annual rate since 1993.

Sinochem’s apparent approach for Soco represents the latest in a string of bids in the oil industry. Falling stock and oil prices and the squeeze in credit markets have unleashed a wave of consolidation as stronger companies seek opportunities to pick up oil and gas reserves at distressed valuations.

Andrew Whittock, oil and gas analyst for Oriel Securities, said that the approach was “very preliminary” but he noted that Soco’s assets in Vietnam were large and attractive.

The London-based group had more than 48 million barrels of proven reserves of oil in Vietnam at the end of last year, but that could rise to more than 125 million barrels pending further exploration.

“Soco is the most obvious take-out candidate in the sector, given its lean structure, cashpile and the potential scale of the Vietnam assets,” RBS told clients in a research note.

The approach could flush out a number of other bidders, with Talisman, BP, Total and ConocoPhillips named as potential rivals.

The price of a barrel of Brent crude fell by $6.17 to $76.49, its lowest level in a year. US light crude for November delivery was down $6.74 at $79.85 a barrel.

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