Central Petroleum says it would be "irresponsible" to knock back an improved takeover bid from Macquarie Group.
The company's board says it has unanimously recommended approval of Macquarie's raised offer of 20 cents plus a "contingent value note" (CVN) to be determined by the future value of some of Central's licences and prospects.
Central's shares were up 3.5 cents, or 21.21 per cent, at 20 cents by 1146 AEDT after coming out of a trading halt.
The oil and gas company in November rejected a 17.5 cents a share bid by Macquarie, currently a minority stakeholder, that valued Central at $75.8 million saying it was not in shareholders' best interests.
Chairman Robert Hubbard on Friday said it would be "irresponsible" to deny shareholders the opportunity to take advantage of the revised bid, which represents a 60 per cent premium on the price of Central shares the day before Macquarie's initial offer.
"The directors have explored alternative strategic, funding and transaction possibilities and have concluded that the Macquarie MPVD proposal is the most attractive to shareholders," Mr Hubbard said in a statement.
"And the board would be irresponsible to deny shareholders the opportunity of this liquidity event."
Mr Hubbard also said the offer presented an opportunity for Central to undertake new development and to capitalise on opportunities from the current domestic gas shortage.
Company directors said shareholders could also see additional value - up to 19.6 cents per note - from the CVN over the next four years.
Central shareholders will likely be able to vote on the Macquarie bid in May.
Macquarie shares were $1.22, or 1.4 per cent, higher at $88.49, at 1146 AEDT.
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