The six directors and secretary of Gaelic Resources, the listed exploration company, have made combined paper profits of about £2 million from share options and warrants issued as part of an acquisition.

The company reported losses last year of £758,000 and its auditors, KPMG, have previously questioned its ability to continue trading.

Shareholders of the company yesterday voted unanimously to acquire European Hydrocarbons, a new exploration company, for £1 million sterling and to raise £2.5 million in a placing of 250 million new shares.

A resolution proposing a one-for-four open offer of an additional 105.6 million new shares at 1p per shares was also passed.

The company described the acquisition as "high risk", but said it provides a good chance for Gaelic Resources to "re-establish itself in the independent oil and gas exploration sector".

As part of the acquisition, two new directors are to join the board. They are Dr Colin Phipps, a petroleum geologist and founder of Clyde Petroleum, and Dr David Quick, chief executive of Greenwich Resources.

European Hydrocarbons has a stake in two exploration licences in Portugal and the North Sea. The raising of the £3.5 million does not cover the total acquisition price of the 25 per cent of the Portuguese licence.

To overcome this, Gaelic has entered into an underwriting agreement with Charles Street Securities and Phipps and Co to acquire the full 25 per cent.

European Hydrocarbons was incorporated last June as a vehicle for certain European oil and gas exploration activities of Dr Phipps and Dr Quick. They will hold about 12 per cent of the enlarged Gaelic equity and the shareholding of small investors will be substantially diluted. At an extraordinary general meeting yesterday, there were few shareholders present and the directors were not asked any questions.

The two directors receiving the most share options and warrants are Mr Robert Keith, an executive director of the English company Eidos, and Mr Thomas Fussell, founding shareholder and managing director of Charles Street Securities.

Mr Fussell and Mr Keith will receive 20 million share options and 50 million warrants as a result of the acquisition. The value of these will depend on the market price they are sold at. The company chairman, Mr Ian Forrest, has received 5.3 million warrants and 10 million share options, the company secretary, Mr Pat Mahony, who is the managing director of Bula Resources, has received 2.25 million share options, Dr Phipps has received 10 million share options and Dr Quick has received 5 million share options.