AGL Energy Ltd intends to buy out Mosaic Oil NL, a gas and oil exploration company.

AGL Energy made a non-binding offer worth 15 cents per share to Mosaic, and the Mosaic board responded that they will discuss the matter with AGL in further detail.

Through a system of arrangement, the buy out would give Mosaic a value worth $123.2 million. AGL's offer is almost two times the closing price of Mosaic, which is at 7.8 cents on Wednesday.

During the early trade, the shares of Mosaic were going strong, and at 1020 AEST were selling up 60 per cent, or 4.7 cents, at 12.5 cents.

AGL Energy has disclosed that it has divulged into several pre-bid acceptance settlements in regard of 12.8 per cent of the distributed share capital of Mosaic.

Mosaic announced to its shareholders that they should not take any action in regard to their shares.

Last April, Mosaic disclosed that it was purchasing interest of up to 40 per cent in the large portion of land in the Cooper-Eromanga Basin, located southwest of Queensland, in line with reports that the area is rich in oil.

Mosaic is also surveying New Zealand areas for gas and oil.