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Mon 21 Sep 2009 01:31 AM

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Libya agrees to buy Canada's Verenex

Libyan Investment Authority's $293.7m purchase of oil producer follows earlier withdrawal by China.

Libya’s sovereign wealth fund, the Libyan Investment Authority, has agreed to buy Canada-based oil producer, Verenex Energy, for around C$314.1 million ($293.7 million) in cash.

The C$7.09 per share ($6.63 per share) offer for Verenex's outstanding shares marks a steep discount to the LIA's original offer of C$10 per share ($9.35 per share) back in March, when it pledged to match any offer by China's CNPC International Ltd.

Verenex has operations in Libya's Area-47, a region estimated to hold roughly 2.15 billion barrels of crude oil reserves.

In June, however, Libya's NOC (National Oil Corpration) claimed Verenex had acquired Area 47 through an improper bidding process.

Meanwhile, CNPC remained interested after an Aug. 24 deadline passed, but the Libyan authorities said earlier this month the Chinese company had withdrawn.

In a statement, James D. McFarland, President and CEO of Verenex said: "The Libyan Investment Authority is a highly respected Libyan institution with a solid track record of doing deals.

''Our focus has always been on doing the best for our shareholders and the Board of Verenex unanimously endorses this deal as in the best interests of Verenex shareholders."

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