A bid battle for Heritage Oil could break out after the explorer said its proposed merger with Turkey's Genel Energy was off.

It said instead that it would sell its interests in Uganda to Italian major ENI for £900 million.

Heritage, run and substantially owned by the former African mercenary Tony Buckingham, is one of the star performers of the London oil and gas sector and was reckoned to be headed for the FTSE 100 on the back of its planned Genel deal.

ENI, a serial predator of the London stockmarket has been prowling around Uganda in which another stellar London performer, Tullow Oil, has significant interests. However, ENI's search in Uganda has resulted in a deal with Buckingham and not, as speculated, Tullow.

The deal also spells the end of the Genel-Heritage merger.

Genel has interests in Heritage's other significant play, the Kurdistan region of northern Iraq. The cash sees Heritage pledging to give as much as £250 million or 100p a share to investors.

But analyst Jessica Saadat from broker Cazenove said that the ENI deal could yet be gatecrashed if others put a higher value on Heritage's interests in Ugandan thus “triggering an unsolicited approach for the whole company”.