(Adds details, analysts' comment, share prices)
By Karolin Schaps
LONDON, Nov 24 (Reuters) - Rockhopper has made a57.1 million pound ($86.5 million) takeover offer for rivalFalkland Oil and Gas, the companies said on Tuesday ina deal that could breathe fresh life into Falklands' explorationwhich has been hit by weak oil prices.
The all-share offer, which has been approved by directors ofboth companies, will require Rockhopper to issue nearly 160million new shares and will give FOGL shareholders around 35percent of the joint company.
The deal will reinvigorate drilling plans in the Falklandsbasin, a resource-rich area in the southern Atlantic whereexploration remains controversial due to ongoing tensionsbetween Britain and Argentina over the sovereignty of theislands.
The takeover comes just days after Argentina saw a change inleadership as conservative challenger Mauricio Macri won apresidential election on Sunday.
The deal will increase Rockhopper's acreage in the NorthernFalklands Basin, home to Premier Oil's giant Sea Lionfield where progress has slowed due to weak oil prices.
Premier Oil previously said it would soon start partnershipdiscussions with potential co-investors in Sea Lion and areshuffle in ownership through Tuesday's deal should makeinvestments more attractive.
"Despite the possible funding concerns over Sea Lion, thedeal should reinvigorate interest in the basin," said analystsat Cenkos Securities.
"We see the deal as being strategically sensible and goodfor both sets of shareholders."
Shares in FOGL were up 4.2 percent at 0829 GMT, whileRockhopper shares were down 1.4 percent.
FOGL Chief Executive Tim Bushell and Chairman John Martinwill be joining the Rockhopper board as non-executive directors,the companies said.
FOGL's finances have been under scrutiny after it announcedan unsuccessful well drilled at Humpback in the Falklands inlate October. Rockhopper said on Tuesday FOGL's cash positionwas around $8.6 million and debt at $15 million.
The deal is expected to close in the first quarter of 2016.
($1 = 0.6604 pounds) (Editing by David Holmes and Jason Neely)
