BEIJING - China National Offshore Oil Corp. (CNOOC), the country's top offshore oil producer, has entered into an agreement to buy Canada's Nexen Inc. for $15.1 billion in cash.
The deal will help expand CNOOC's overseas business and resource base in regions such as Canada, Mexico and Nigeria, the company said in a statement to Hong Kong stock exchange.
"The current indebtedness of Nexen of approximately $4.3 billion will remain outstanding. The company intends to fund the proposed acquisition through existing cash resources and external financing," it said.
Pending government approval, the transaction,which has received the approval of the board of directors of Calgary based Nexen's and CNOOC, is expected to be concluded in the fourth quarter, reported Xinhua.
The companies already have a strategic alliance in Nexen offshore wells in the Gulf of Mexico.
"This transaction will allow for significant investment in our business and opens the door to new opportunities for our employees," Kevin Reinhart, interim CEO of Nexen, said in a statement.
Nexen had an average production of 207,000 barrels of oil equivalent per day (mboe/d) in the second quarter of the year.
The deal could face some opposition from the Canadian government, which in the past has rejected foreign interest to protect the country's natural resources industry.
Industry Minister Christian Paradis said in a statement that he will review how the deal affects investment, employment, production and resource processing in Canada.
He said the Competition Bureau, an independent law enforcement agency, will determine if the deal substantially lessens Canada's ability to compete in global markets.
Seven years back CNOOC had tried to buy Unocal but was rejected by U.S. lawmakers citing national security fears.
The acquisition move by CNOOC is part of China's aggressive bid to secure oil and gas assets for its energy security.
The Chinese exploration major, which has already invested about $2.8 billion in Canada, said it plans to set up its regional headquarters in Calgary.
Total acquisitions by Chinese energy firms jumped from less than $2 billion between 2002 and 2003 to nearly $48 billion in 2009 and 2010, according to the International Energy Agency.
Nexen operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East, with its biggest reserves in Canadian oil sands. It produced an average of 213,000 barrels of oil equivalent a day in the second quarter of this year.
Besides oil sands, Nexen is also active in exploring for natural gas in shale rock formations. It owns about 300,000 acres of shale-gas blocks in the Horn River Basin in British Columbia.
It will be a tough call for the government, which has to decide whether the deal is a net benefit to Canada as a whole and not just to shareholders, said University of Calgary economist Jack Mintz, reported AP news agency.
He said CNOOC prepared its bid with an eye to regulators by offering a 61 per cent premium to shareholders and stressing that it intends to keep the Calgary-based management intact.
The last time Canada faced a similar challenge when Australia-based BHP Billiton Ltd. launched a hostile takeover bid for Saskatchewan's Potash Corp. the government rejected the deal under pressure from Saskatchewan Premier Brad Wall and corporate players.
Source: http://www.uzbekistannews.net/index.php?sid/207684453/scat/bf053b50c46383e0
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