CHINA OIL & GAS (00603) surged more than 21% in early trading, and as of the latest update, the stock was up 18.44% at HK$0.167, with a turnover of HK$2.9268 million. The company announced that its subsidiaries, CNPC Investment, Tiandali Tong, and CNPC Zhongtai, have signed a letter of intent with Shandong Shengli Co., Ltd. (000407.SZ) for the issuance of shares and cash payment to acquire assets. Under the agreement, Shandong Shengli intends to purchase stakes in certain subsidiaries held by the group through a combination of share issuance and cash payment.

The proposed transaction includes Shandong Shengli acquiring full ownership of Zhongyou Zhuhai and Tianda Shengtong, a 51% stake in Nantong Zhongyou, and a 40% stake in Ganhe Zhongyou. Upon completion, Shandong Shengli is expected to hold or control 100% of Zhongyou Zhuhai, 100% of Tianda Shengtong, 80% of Ganhe Zhongyou, and 100% of Nantong Zhongyou.

CHINA OIL & GAS noted that since the parties have not yet signed a legally binding agreement and negotiations are ongoing, the proposed transaction outlined in the letter of intent may not necessarily proceed.