Canadian petroleum producer Chieftain International Inc said yesterday it had agreed to a friendly all-cash takeover offer from Hunt Oil Co that values the company at $600 million and beefs up Hunt's operations in the Gulf of Mexico.

Dallas, Texas-based Hunt, through its wholly owned Canadian subsidiary, said it would pay $29 a share for all the outstanding shares of Chieftain, whose shares closed at $29.74 on the American Stock Exchange on Monday.

After being halted in the morning to announce the takeover, shares of Chieftain dropped C$1.40 to C$44.10 later in the day on the Toronto Stock Exchange. It shares have ranged between a high of C$51.25 and a low of C$23.60 in the past year.

Although Chieftain is based in Canada, most of its assets are in the Gulf of Mexico. It produced an average of 105 million cubic feet of gas and 3,600 barrels of oil and gas liquids a day in the first quarter.

Its assets fit well with Hunt's existing properties, said Craig Glick, a senior vice president with the buyer. He said privately-owned Hunt had been looking at Chieftain for about a year.

One analyst said the sharp drop in gas prices, which have fallen by 33 per cent in the past three months, made it harder to determine a price for Chieftain and dragged out the process.

"Chieftain has largely U.S. assets so it's not really a transaction that makes any difference to the Canadian scene, but it will tell people what Gulf of Mexico gas reserves are worth," said Martin Molyneaux, analyst with Calgary brokerage FirstEnergy Capital Corp.

The purchase of Chieftain is part a Canadian buying binge by Hunt, which paid C$176 million in February for two gas fields in Alberta from Canadian 88 Energy Corp. The company mounted a hostile bid late last year for Berkley Petroleum Corp, a mid-sized producer scooped up by Anadarko Petroleum Corp for C$1.14 billion.

Hunt also failed in a hostile bid earlier in 2000, when it made a run at Ulster Petroleums Ltd Ulster was purchased for about C$1 billion by Anderson Exploration Ltd and Hunt satisfied itself with a C$760 million deal for Newport Petroleum Corp.

Glick said Hunt's aggressive pace is not driven by high oil and gas prices. "We don't have to grow through acquisitions. We can grow through the drill bit but we pursue opportunities to add value where we see them."

The deal means a change in control for the last mid-sized petroleum producer based in Edmonton, Alberta's capital and second-largest city.

The purchase continues the trend of U.S.-based companies snapping up Canadian energy firms. It follows a C$9.8 billion friendly acquisition last month of Gulf Canada Resources Ltd by Conoco Inc, the largest takeover in the Canadian oil patch's history.