Leeds-registered Imperial, which is focused on operations in Russia, yesterday said it is recommending the cash offer by ONGC VIdesh Ltd (OVL), the overseas arm of India's Oil and Natural Gas Company (ONGC).

The takeover would mark a massive success for Imperial and its founder and chairman Peter Levine, after it floated in 2004 with a market value of about £2.5m.

The pre-conditional offer is subject to approval from the Russian authorities. Shareholders would receive £12.50 per share and Imperial would be de-listed from the London Stock Exchange.

Last month Imperial confirmed it had received two separate offers. The second, believed to be from China's Sinopec, is still understood to be on the table but has not progressed. Analysts believe a rival Chinese bid could push the price higher.

Yorkshire lawyer Mr Levine said: "It's not over until the fat lady sings. There's a recommendation there but we are still running this company."

ONGC's offer is at a 62 per cent premium to the closing price of £7.72 per share on July 11, the day before it confirmed it had received an approach. Mr Levine stands to make £78.4m from his 6.1 per cent shareholding.

Exploration and oil production company Imperial aims to produce 25,000 barrels per day by the end of the year, rising annuallly to 80,000 by the end of 2011. Imperial owns licences in the Tomsk region of Siberia covering a total 16,800 square kilometres. It also has a 75 per cent stake in a licence covering 2,022 square kilometres of Kazakhstan.

Imperial has 920m barrels of proven or provable oil reserves, and a total of 3.4bn barrels including possible reserves.

Mr Levine said the offer represents "fair value".

"As Imperial Energy moves into the next phase of its development, with production increasing further over the coming years, it makes strategic sense to be part of a larger group," he said.

He added Imperial's growth has been a "humbling" experience. "It's been fun but not without its stresses and strains," he said. "We have surprised ourselves as to how far we have come in the space of time. We feel very humble in getting this far."

ONGC is India's leading oil and gas producer and is owned mainly by the Indian government. It has 37 projects in 17 countries, and aims to produce 60m tonnes of oil and gas annually by 2025. It already has a presence in Russia through its 20 per cent stake in the Sakhalin-1 project.

Russia has become an increasingly difficult country in which to do oil deals, as the Russian government has tightened its hold on the oil industry. Sources understand ONGC has had high-level discussions with Russian authorities, on both a commercial and government level, and has received a "favourable response". Sources added the Kremlin would expect ONGC to sell a stake on to a Russian state oil group such as Rosneft.

Mr Levine said: "We have to work in the environment that we are placed and we have to accept that environment and how it is,"

"We have been able to demonstrate that we are making progress and working in the best interest of both the shareholders and the country in which we are situated."

R.S. Butola, managing director of OVL, said: "The acquisition represents an important addition to OVL's operations and we believe OVL's financial strength and technical expertise will further enhance the attractive growth potential of the business in the Tomsk region."

Analysts at brokerage Daniel Steward said: "This is a good price, given consideration for the current softening in oil prices, the turbulence on global stock markets and the geopolitical stage."

But Andrey Gromadin at JP Morgan said a rival bid could push the price higher. "We believe £12.50 to £15 per share is highly attractive and represents a best-case scenario for shareholders."

Imperial is due to release its interim results on Friday.


Firm's founder

PETER Levine founded Imperial Energy in 2004. As the largest individual shareholder of the company, he holds 6.1 per cent of its shares.

He was appointed chief executive and chairman when the company was formed, but handed over the role of chief executive in April 2007.

He graduated in jurisprudence from Trinity College, Oxford in 1977, qualified as a solicitor in 1980, and specialised in international corporate law.

Mr Levine was formerly the Honorary Consul for the Republic of Kazakhstan in the UK and joint chairman of the British-Kazakh Society. His ancestors were Russian and he speaks the language.

Earlier this year Mr Levine stood down as chairman of steel firm Severfield-Rowen to concentrate on his Imperial commitments.