China's CNPC International Ltd . has backed away from a deal to purchase Calgary-based Verenex Energy Inc. putting an end to a deal that was worth about half a billion dollars when it was announced early this year.
Verenex said Tuesday that it has been unable to get the necessary approval from Libyan authorities for the deal, which would have involved CNPC paying $10 per share to buy all of Verenex and $47-million to Libya's National Oil Corp.
The Canadian company's shares plunged following the announcement. They were at $6.37, down $1.28 or nearly 17 per cent at mid-morning Tuesday on the TSX Venture Exchange.
The junior energy company has been developing Area 47 and released an estimate last year that it contains 2.15 billion barrels of oil equivalent.
The deal with CNPC, a subsidiary of state-owned China National Petroleum Corp., was announced in February but has been in trouble for months.
Libya's NOC said in May that it would match the Chinese company's offer of $10 per share but in June claimed that Verenex had acquired Area 47 through an improper bidding process.
The CNPC deal continued in limbo after an Aug. 24 deadline for the deal passed without a decision from Libyan authorities but on Tuesday Verenex announced the Chinese company has withdrawn.
Verenex also said it continued to be in discussions with Libyan authorities and indicated that the General People's Committee "has made it clear to Verenex that it is seeking to negotiate a reduced purchase price."