Clear road ahead? Verenex is still waiting for approval of its takeover by CNPC
Verenex move stalled by Libya probe
China National Petroleum Corporation's (CNPC) planned $360 million takeover of Calgary-based Verenex Energy has hit a new hurdle, with the Libyan authorities launching a probe into Verenex's pre-qualification for the Exploration & Production Sharing Agreement (EPSA) IV round.
CNPC's takeover of Verenex - agreed earlier this year - requires the consent of both Libya's National Oil Corporation (NOC) and the General People's Council.
Consent to the deal has not yet been granted, with NOC saying it may exercise its pre-emption rights and take control of the Canadian company itself.
It now appears that until the investigation is completed, there can be no progress on the Verenex takeover.
Verenex said in a statement issued today that it had asked CNPC to agree to extending the outside date for closure of the takeover until 24 August.
However, Verenex added: “Investors are cautioned that there can be no assurance that consent to the offer by CNPC will be received soon from Libyan authorities, or that a sale transaction will be concluded on the terms contemplated or at all."
In the statement, Verenex said the authorities are looking into allegations it was improperly pre-qualified to bid in the 2005 EPSA round, in which it won Area 47.
“Verenex considers these allegations to be without merit and vigorously denies them,” the company said.
“No specific improprieties or details of the allegations have been provided to Verenex.”
Verenex pointed out that the allegations are being made four years after the award and coincide with its request for consent for the sale of the company.
The company said that during talks held with NOC ahead of CNPC's offer, NOC had indicated that it required an approval bonus in return for agreeing to Verenex's takeover.
The Canadian player said that, based on indications from NOC, it estimated the bonus would be about C$46.7 million (US$41.1 million).
Verenex added NOC had indicated that payment of the bonus would speed up the approval process, with formal consent being granted within three to four weeks.
"Since the execution of [the agreement with CNPC] in February 2009, Verenex has actively sought NOC's consent to the transaction. However, to date NOC has continually refused or failed to provide such consent," Verenex said.
The company, which said it had enough cash to pay for planned work over the next few months, added its annual and special meeting of shareholders will go ahead as planned on 10 August.