The Australian-listed energy explorer, Cue Energy is recommending investors reject a take-over bid from New Zealand Oil & Gas.
The listed company, which has a near 20 percent stake in Cue, is offering 10 cents a share.
Cue's board said the take-over bid was too low, and was a premium of only 11 percent on the company's closing price of 9 cents a share on Wednesday.
It points out Cue, which has an interest in the Maari field in Taranaki, has $37 million in cash reserves and no debt.
The board also said that if New Zealand Oil & Gas gains control, it could change Cue's growth plans which may not be in the interests of shareholders.
Cue will prepare a target statement on the offer and send it to investors in two weeks time.
It has also commissioned Grant Samuel to prepare an appraisal report on the bid.