Verenex, Libya aiming to meet deal deadline
London, November 5, 2009
Verenex Energy and Libya expect to finalise a deal by Friday to sell the company to a Libyan sovereign wealth fund, but a further delay is not ruled out, sources familiar with the matter said.
The Libyan Investment Authority (LIA) has agreed to pay C$7.09 a share for Verenex, a Canadian oil firm with assets in Libya, in a deal valued at around C$316 million ($297 million).
Verenex said in an October 20 statement the parties have until November 6 to sign a definitive agreement.
A source with knowledge of the talks said the parties were hoping to finalise the deal by Friday, but did not rule out the prospect of the date to reach the final agreement being extended for a second time.
'We're still targeting getting everything done by the 6th,' said the source, who declined to be identified because the talks are confidential. 'That's the target.'
'We are still in negotiations, but I hope we will finalise everything,' said a second source.
The Verenex saga highlights the risks for Western investors in Libya, holder of Africa's largest oil reserves. The government blocked a deal by China, which offered to buy Verenex for C$10 a share in February. The Libyan Investment Authority later agreed to buy the firm for the lower price.
Some investors in Verenex, while believing the remaining matters under discussion are not material to the terms of the deal, were sceptical it would be tied up by Friday.
'To extend this for another few weeks would be par for the course,' said one shareholder. 'What's another few weeks when this thing has been dragging on for months?'
Verenex shares, which have risen as high as C$9.74 and fallen as low as C$5.60 this year, edged higher on Wednesday, rising 0.4 per cent to C$6.80 by 1451 GMT.
Shokri Ghanem, head of Libya's National Oil Corp, declined on Wednesday to comment on Verenex.
Verenex executives could not be reached for comment on Tuesday.
Libya has attracted a wave of interest including from Western energy companies such as BP, as well as Chinese and Japanese firms, since most international sanctions were lifted in 2004.
Progress in developing new projects has slowed, partly in line with a determination across resource-holding countries to maximise their own returns from oil and gas reserves.
Verenex holds promising oil assets in Libya, where it has drilled 21 wells with a 95 per cent success rate.-Reuters
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