Cairn Energy has agreed to buy Nautical Petroleum in a £414m deal, its second North Sea acquisition this year.
British oil explorer Cairn Energy's hopes to ramp up its presence in the North Sea and increase its stakes in fields expected to produce oil within four years.
Its investment in the region, which for decades has boosted the UK's economy and powered homes, follows BP's recent green light for a £4.5 billion project off the west of the Shetland Islands.
Edinburgh-based Cairn has focused much of its efforts on searching for oil off the coast of Greenland in recent years, although it has so far been unsuccessful, racking up a £594 million bill in the past two years.
More recently it has broadened its focus to closer to home as it looks to secure a steady supply of oil in the near term, embarking on this strategy in April when it bought Norwegian rival Agora Oil and Gas for £290m.
"This acquisition is another step towards building a balanced portfolio of transformational exploration, appraisal and development assets, and complements our recent acquisition of Agora to help build a platform in North West Europe," said Cairn's Chief Executive Simon Thomson.
The acquisition will double Cairn's stake in the Catcher area, east of Scotland, which contains several large oil discoveries, and give it a 25 per cent stake in Kraken, east of the Shetland islands, which are both expected to produce oil by the end of 2015.
In addition, it would include a number of North Sea exploration prospects.
Nautical Petroleum operates six licences and has interests in another 24 in the UK, Ireland and France.
"We view this as a good deal for Cairn, increasing exposure to a core asset and adding a further development project," said Thomas Martin, an analyst at Canaccord Genuity.
"We also view the deal as positive for the North Sea."
The deal triggered a 55 per cent rise in Nautical's share price to above Cairn's offer price, while other oil companies operating in the North Sea including Ithaca and Valiant Petroleum were up more than 8 per cent.