Bloomberg China National Petroleum Corp., the biggest Chinese oil company, agreed to buy Canada's Verenex Energy Inc.

By Joe Carroll
Feb. 26 (Bloomberg) -- China National Petroleum Corp., the biggest Chinese oil company, agreed to buy Canada's Verenex Energy Inc. for about C$499 million ($400 million) to expand in Libya, home to Africa's largest crude reserves. Beijing-based China National agreed on Feb. 24 to buy the Canadian company for C$10 a share in cash, according to a statement today from Calgary-based Verenex. The company said its
largest shareholder, Vermilion Resources Ltd., supports the sale. Verenex put itself up for sale in November after four straight years of losses. The takeover needs approval from Libyan officials under terms of an exploration and production accord
with the state-owned oil company, Verenex said. China National, which began exploring for oil in Libya in 2005, has the right to match any rival offer, and Verenex agreed to pay a C$15 million breakup fee if the company scuttles the
deal.
Verenex surged C$1.72, or 22 percent, to C$9.52 at 10:32 a.m. on the Toronto Stock Exchange after earlier increasing as much as 24 percent, the biggest intraday gain since Nov. 28. The shares have more than doubled in value since the company opened
its books to potential suitors on Nov. 26. Libya has 41.5 billion barrels of crude reserves, about 35 percent of the available oil on the African continent, according
to London-based BP Plc. Standard Chartered Bank and FirstEnergy Capital Corp. acted
as financial advisers to Verenex. Macleod Dixon LLP provided legal counsel.

Scotia Waterhous Inc. was financial adviser to China National. Dewey & LeBouf LLP and Stikeman Elliot LLP provided legal counsel, while Ernst & Young acted as tax and accounting adviser to the Beijing-based company.

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