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Latest Headlines
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Mar 18, 2009 10:21:00 AM MST
Libya''s state run oil company to buy Canada''s Verenex Energy (Verenex)
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CALGARY _ Libya´s National Oil Company says it is blocking China National Petroleum Corp.´s planned $499-million acquisition of Calgary-based Verenex Energy Inc. (TSX:VNX), which has lucrative operations in the North African country.
NOC chairman Shukri Ghanem told The Associated Press Wednesday the state-run firm will match CNPC´s $10-per-share cash offer Verenex, which has access to an estimated 2.15 billion barrels of crude oil reserves in its Area-47 property.
The Libyan firm has the right of first refusal under its agreement with Verenex.
Verenex shares fell 8.3 per cent on the Toronto Stock Exchange in Wednesday trading to $8.55.
That´s still up sharply from the stock´s 52-week low of $2.22 reached in October, before news began circulating that Verenex was looking for a buyer.
In a brief statement, Verenex said it is "unable to confirm or deny reports on various news services" that Libya plans to buy the company.
"As previously announced, the proposed sale of Verenex is subject to certain consents from the Libyan National Oil Corporation. Verenex has requested such consents from the NOC but no formal decision has yet been communicated to the company."
The CNPC deal, announced in late February, carries a $15-million break fee payable to the Chinese state-owned company in the event of a superior bid.
The Verenex board of directors has recommended shareholders tender to the offer, but it can´t go to a vote until it gets the go-ahead from Libya´s NOC.
Haywood Securities analyst Alan Knowles noted on Tuesday that the NOC has operations very close to Verenex´s property.
"So they´re well aware of the success Verenex has, and it probably looks attractive to them at the price CNPC has negotiated," he said.
Even so, he does not see the Chinese and Libyan state-run companies bidding against each other for Verenex.
"They will probably come to an arrangement with CNPC because CNPC is also active in the country and wants to be more active in the country. So you don´t want to dissuade them from doing that if you´re the NOC," Knowles said.
Verenex acquired the rights to Area 47 in 2005 and has drilled 16 exploration and appraisal wells. An estimate last year said the property contains 2.15 barrels of oil equivalent.
Verenex is the operator of the asset with a 50 per cent interest for an initial five-year period, reduced to 25 per cent for commercial developments in the next 25 years.
Vermilion Energy Trust (TSX:VET.UN), another Calgary-based energy company, owns 42 per cent of Verenex.
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