Tullow Oil is expected to announce today that it is acquiring £200 million sterling worth of gas producing assets in the North Sea from the UK group, BP. The acquisition will be funded by a mixture of debt and new Tullow shares.

BP is selling the assets as a condition set by EU competition regulators for approval of its merger with Atlantic Richfield. Tullow shares were suspended last week at 63.50p sterling when the company announced it was on advanced negotiations on what it described as a substantial asset acquisition.

The deal will more than double the size of the company.

At 63.50p sterling, Tullow has a market capitalisation of about £150 million sterling. At that level the shares were well down on their year 2000 high of 117p. Because the value of the assets being acquired is greater than its market capitalisation, the deal is structured as a reverse takeover. But because assets are being acquired rather than a company, Tullow remains in control of the operation. A spokesman declined to comment on the deal yesterday. But it is understood that Tullow will make an announcement to the Stock Exchange this morning that agreement has been reached with BP.

Tullow has been active in the gas-to-power area for a number of years in Senegal and more recently in the UK.

The company's strategy as set out in its most recent annual report is to become a major player in the gas-to-power business in selected markets.

The deal will give Tullow a very significant boost in its drive to become a significant player in its chosen market.