British independent oil and gas exploration company Lasmo said yesterday it was looking at the possibility of a merger with fellow firm Enterprise Oil, but agreement was not certain.

"Lasmo is in discussions with a number of parties on a range of strategic initiatives, one of which is an evaluation of a possible merger with Enterprise Oil," a company statement said.

It followed press reports that the two companies were in merger talks.

"All discussions are at an early stage and there is no certainty that any agreement will be reached on any initiative," the statement said.

A further announcement would be made in due course, if appropriate.

The Sunday Times said a £2.7 billion sterling ( (euro) 3.8 million) merger was on the cards, but the two companies, which fought a fierce takeover battle four years ago, needed to overcome a number of obstacles.