Shares of biofuels developer Verenium Corp. (Nasdaq: VRNM) surged as much as 86 percent from Wednesday’s closing price, in morning trading on Thursday after the company announced that BP (NYSE: BP) will pay $98 million for technology and facilities developed by Verenium.

“This agreement should give both companies the flexibility to pursue the growth opportunities in the respective businesses and achieve goals in the near-term,” said Verenium’s president and CEO Carlos A. Riva. ” As a result of this transaction, Verenium will have the resources to grow our commercial enzyme business while maintaining strategic access to the emerging cellulosic ethanol market in a manner that better fits our resources.”
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Under the terms of the agreement, BP will acquire Verenium’s Jennings, Louisiana facilities, including a pilot plant and demonstration scale facility; Verenium’s research and development facilities in San Diego; cellulosic biofuels technology and related intellectual property; and Verenium’s cellulosic enzyme technology and related intellectual property. BP will also retain scientists and technology experts necessary to move the projects forward.

Verenium, which is based in Cambridge, Mass., will retain its core commercial enzyme business, the ability to access select biofuels products developed by BP using the technology BP acquired, the ability to transition out of its San Diego R&D facility over the next two years, $98.3 million in cash, and an additional $10.8 million in cash to be released upon assigning the lease of Verenium’s R&D facility to BP.

BP will become the sole investor in Vercipia Biofuels, a 50-50 joint venture formed by BP and Verenium in February 2009, and will independently manage all of Vercipia’s activities going forward. Similarly, Galaxy Biofuels, a 50-50 joint development company owned by BP and Verenium, will be owned 100% by BP.

The transaction is expected to close in the third quarter of 2010.