China’s CNOOC to buy Nexen for $15.1-billion

[cirr]

Reuters Jul 23, 2012 – 7:19 AM ET

State oil company CNOOC plans to buy Canadian rival Nexen Inc for US$15.1-billion, a deal which if successful would be China’s biggest foreign corporate takeover and a test of Ottawa’s tolerance of outside interest in its resources.

China’s largest offshore oil and gas explorer is paying US$27.50 for each common share, a premium of 61% to Calgary-based Nexen’s closing price on July 20, according to its statement to the Hong Kong stock exchange Monday. Nexen’s board recommended the deal to its shareholders.

In pre-market trading, shares of the company were up US$9.50 to $26.56 on the NYSE.

Nexen will give Cnooc assets in Canada, the U.K., West Africa and the Gulf of Mexico that produced 207,000 barrels a day in the second quarter, boosting the Chinese company’s output by about 20%. The deal is a second attempt to buy a large North American oil and gas producer after political opposition blocked the acquisition of Unocal Corp. in 2005.

“Cnooc did a nice job in adding oil reserves at less than US$20 a barrel,” said Shi Yan, a Shanghai-based energy analyst at UOB-Kay Hian Ltd. “It’s really a good time to buy assets while crude prices are low and energy firms shed values in stock markets.”

CNOOC has only nine years worth of reserves based on its current production — one of the lowest ratios among major oil companies worldwide — and said the deal would increase its proven reserves by 30%.

“CNOOC has been seeking overseas acquisitions, as the domestic reserves are limited. But there has been many limits, things like foreign companies (being) reluctant to sell, price too high. This deal would be quite a success,” said Yan Shi, oil analyst at brokerage UOB Kay Hian in Shanghai.

The move was quickly followed by another Chinese move on Canadian oil assets, as Sinopec Corp said it would buy 49% of Talisman Energy’s UK unit for US$1.5 billion.

Cnooc will offer to buy Nexen’s prefered shares and the Canadian company’s debt of US$4.3-billion will remain in place, the statment said. Cnooc will pay for the acquisiion using existing cash funds and external financing.

“The acquisition of Nexen will expand the group’s oversea business and resource base in order to deliver long-term sustainable growth,” Cnooc said in the statement. “Nexen will complement the group’s large offshore production footprint in China.”

The Chinese company is paying 8.84 times earnings before interest and tax for Nexen, compared with the median of 33.06 of 10 comparable deals, according to data compiled by Bloomberg. The Beijing-based company will add 900 million barrels of oil equivalent reserves at US$19.94 per barrel through the deal, according to a document posted to the company’s website.

Cnooc plans to boost output by as much as 2.7% this year to the equivalent of as much as 340 million barrels of oil. Cnooc lost production from its largest offshore oilfield in the first quarter after the site was temporarily shut down.

As part of the transaction, CNOOC said it plans to list its shares on the Toronto Stock Exchange. It also intends to have a head office in Calgary to overseen its North and Central American operations.

CNOOC also noted that it intends to keep Nexen’s existing management and staff.

Nexen has faced numerous challenges over the past few years, most recently the troubled launch of its Long Lake oilsands project in northern Alberta. The project has yet to come close to its design capacity of 72,000 barrels of bitumen per day due to a number of operational glitches.

In January, Nexen announced a major management shakeup, with Marvin Romanow leaving his post as CEO and Gary Nieuwenburg stepping down as the executive vice-president of the company’s Canadian operations.

Reinhart was previously the company’s chief financial officer.

Nexen’s original partner at Long Lake, Opti Canada, filed for court protection from creditors last summer and was later acquired by CNOOC for US$2.1 billion.

FOREIGN INVESTMENTS

The deals in Canada have not yet awakened the political opposition that killed CNOOC’S US$18.5 billion Unocal bid.

But Canada can review and block any foreign investments worth more than $330-million if it thinks a deal is not in Canada’s best interests. It most noticeably exercised that right in 2010 when it blocked Anglo-Australian miner BHP Billiton’s US$39 billion hostile takeover of Potash Corp, the world’s top fertilzer producer.

The Chinese company has made several other investments in Canadian companies over the past seven years, including buying stakes in MEG Energy Inc. and a 60% investment in Northern Cross (Yukon) Ltd.

With files from Canadian Press

Nexen to be bought by Cnooc in $15.1-billion deal | Energy | News | Financial Post

 

[qwerrty]

we'll soon find out if candada is american puppet or not?

 

[ahfatzia]

Look like good long term investments for both CNOOC and Sinopec, hope the Canadian Government will approve the deal. Or it might've arranged by Prime minister Harper's visit to Beijing a few months back.

 

[Maira La]

Good job CNOOC!! Never thought Chinese influence would reach this far (Nexen is like one of the biggest company here!), but it's a sign of things to come.

 

[ephone]

Wow, quite a mark-up.

 

[cirr]

Less than 20 US dollars a barrel and only 8.84 times earnings before interest and tax。。

 

[Pak47]

Nice, hope deal goes through..

Lets find out.. Canadian American puppets or not

 

[cirr]

China dives into UK’s North Sea oil industry

China has made a dramatic swoop on the North Sea oil industry, buying up assets that account for more than 8pc of the UK's entire oil and gas production.

By Emily Gosden

6:45AM BST 24 Jul 2012

Chinese state-controlled group CNOOC agreed a $15.1bn (£9.7bn) offer to buy Canada’s Nexen, which is the second biggest oil producer in the UK North Sea. Its net UK production of both oil and gas is 114,000 barrels of oil equivalent per day (boepd).

In a separate deal, China’s Sinopec splashed out $1.5bn on a 49pc stake in the UK unit of Canada’s Talisman Energy, which produced an average of 71,500 boepd last year. Talisman said its joint venture with Sinopec would “invest more in the UK than Talisman would have on its own”.

Both Nexen and Talisman rank within the top 10 oil and gas producers in the UK North Sea. The UK’s entire oil and gas output stood at 1.8m boepd in 2011, according to industry body Oil & Gas UK.

Nexen, which is listed in both New York and Toronto, also has assets in Canada, the Gulf of Mexico and off the coast of Nigeria. The CNOOC offer price of $27.50 a share is a 61pc premium to Nexen’s closing share price in New York on Friday.

CNOOC will require approval not only from Nexen’s shareholders but also from Canadian regulators, who can block foreign takeovers if they deem them not to be in Canada’s best interests. CNOOC has pledged to seek a listing in Toronto if the deal is approved.

Oil & Gas UK said Monday’s deals reflected “the renewed attractiveness of our province as a place to invest”. It added: “Given the new ownership, we would expect investment activity to remain high.”

The deals are the latest of a spate of Chinese interest in UK energy and infrastructure assets.

Two Chinese nuclear companies have backed rival bids for Horizon, the venture being sold by RWE and E.ON, which plans to build reactors on Anglesey and in Gloucestershire.

In January, China’s sovereign wealth fund bought a 9pc stake in UK utility Thames Water.

China dives into UK’s North Sea oil industry - Telegraph

 

[cirr]

Sinopec pays $1.5 billion for Talisman North Sea Stake

By Scott Haggett

CALGARY, Alberta | Mon Jul 23, 2012 10:49am EDT

(Reuters) - Talisman Energy Inc (TLM.TO) said on Monday that Sinopec Corp (600028.SS), China's top refiner, had agreed to buy a 49 percent stake in its North Sea operations for $1.5 billion as the Canadian company looks to strengthen a balance sheet battered by weak natural gas prices.

Talisman, Canada's No. 6 oil and gas exploration company, will form a joint venture with Sinopec to operate the assets, which produced 89,000 barrels per day of oil and 43 million cubic feet per day of natural gas in the first quarter of 2012.

Talisman has long looked to lower its stake in the North Sea, where it has had little exploration success and where higher taxes have lifted costs. Chief Executive John Manzoni has deployed cash generated in the region into Talisman's promising North American shale fields and its Southeast Asian oil fields.

"Talisman has delivered on two key promises for the year," Manzoni said in a statement.

"We are reducing our working interest and capital spend in the UK business by approximately half, allowing us to focus on and fund growth areas within our portfolio."

It was the second major investment in a Canadian oil explorer by a Chinese company announced on Monday, after CNOOC Ltd (0883.HK) agreed to buy Nexen Inc (NXY.TO) for $15.1 billion. That was China's largest offer for a foreign oil producer since U.S. regulators foiled an $18.5 billion bid for Unocal Corp in 2005.

Sinopec will take a 49 percent stake in Talisman's North Sea assets, which Talisman will operate. With a partner on board, Talisman said it will defer decommissioning of some platforms and look to do additional infill drilling and exploration.

Talisman, whose stock was up almost 7 percent early on Monday, said Sinopec will be able to appoint its employees into key positions within Talisman Energy (UK) Ltd.

Aberdeen, Scotland-based Talisman UK holds an interest in 46 North Sea fields and operates 11 offshore platforms and one onshore platform.

Talisman said $500 million of the proceeds will be used to buy back its own shares, which have fallen 42 percent over the past 12 months because of weak natural gas prices.

The shares were up 71 Canadian cents, or 6.7 percent at C$11.79 on the Toronto Stock Exchange.

Sinopec's investment in the North Sea comes as confidence in the mature North Sea area is reviving despite recent production slumps. In the last two months Kuwait's state oil firm returned to the North Sea after a $500 million deal with EnQuest (ENQ.L), and Japanese trading company Mitsui (8031.T) entered the North Sea for the first time.

Britain is set to pump fewer barrels of oil this year than last, even after production fell 19 percent in 2011. It is hoped that new fields coming onstream and rising investment will hope slow the decline in 2013.

Talisman said the deal is expected to close by year end, pending government and regulatory approvals.

($1=$1.02 Canadian)

 

[qwerrty]

lol as expected american master jumpin in to block the deal. is canada the 51 state?

U.S. senator wants government to block Nexen deal to press China on trade
Tuesday, July 10, 2012. (Jeff McIntosh / THE CANADIAN PRESS)
*ttp://www.ctvnews.ca/canada/u-s-senator-wants-government-to-block-nexen-deal-to-press-china-on-trade-1.895702

 

[LandShark]

Canada is the biggest oil exporter to the USA, bigger than Saudi

 

[RISING SUN]

China envoy warns Canada against politicizing Nexen deal
TORONTO: China's ambassador to Canada warned in remarks published on Saturday against letting domestic politics drive the Canadian government's decision on whether to approve a Chinese state-owned oil company's proposed $15.1 billion takeover of Calgary-based Nexen Inc. "Business is business. It should not be politicized," Ambassador Zhang Junsai said in an interview with Canada's Globe and Mail newspaper. "If we politicize all this, then we can't do business," he added, referring to the Canadian Industry Ministry's review of CNOOC Ltd's proposal to buy the Canadian oil and gas producer.
The deal, if completed, would mark the first outright takeover of a large Canadian energy producer by a Chinese state-owned enterprise. The ambassador also said negotiating a full free-trade agreement within a decade would be the best way of assuring fair, two-way trade and investment between China and Canada. "It's time to open up each other's markets," Zhang said in remarks that coincide with Chinese Commerce Minister Chen Deming's visit to Canada. "It's high time to do the exploratory work on the possibility of a free-trade agreement." The newspaper said it was the first time that a senior Chinese representative called for early, accelerated talks on a free-trade deal. Concern that China has unfairly limited Canadian companies from investing there is one of the issues affecting the debate within Canada on whether the government should approve CNOOC's bid for Nexen. Industry Ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada.
CNOOC, whose offer has already been endorsed by Nexen shareholders, said it did not expect Chen to raise its sensitive takeover bid during talks with the Canadian government. But Canadian Trade Minister Ed Fast fully expects to discuss ways to expand Canada's relationship with China when he meets with Chen on Sunday, Fast's spokesman said on Saturday.
"Canada wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides," spokesman Rudy Husny said in an emailed statement. "Minister Fast will continue this discussion when he meets with his counterpart tomorrow in Vancouver."
Canada's priority is to remove what it considers to be Chinese trade barriers on goods and services, and increase exports such as lumber, grains, beef and value-added products, Husny said.
In the Globe interview, Zhang said a free-trade treaty would go a long way toward expanding trade and investment between the two countries, an important goal for Canadian Prime Minister Stephen Harper.
Harper wants to ease the dependence of Canada's export-oriented economy on the United States, its main trade partner.
Although Canada is seeking substantial foreign investment in its oil and gas industry, the CNOOC move is raising concern inside the cabinet, where some members are wary of letting a Chinese state-owned enterprise buy up domestic assets.
Zhang said Canadian fears over China's intentions are unfounded. "We are not coming to control your resources," he said.
China envoy warns Canada against politicizing Nexen deal - The Times of India
Perhaps Chinese envoy should pay a visit to defence.pk then he will understand that what is happening in the world. If Canada supports the deal,its good but GOD forbids if Canada does not allow this to happen,then they are American puppet. No,not according to me. As per Chinese posters.

China envoy warns Canada against politicizing Nexen deal
TORONTO: China's ambassador to Canada warned in remarks published on Saturday against letting domestic politics drive the Canadian government's decision on whether to approve a Chinese state-owned oil company's proposed $15.1 billion takeover of Calgary-based Nexen Inc. "Business is business. It should not be politicized," Ambassador Zhang Junsai said in an interview with Canada's Globe and Mail newspaper. "If we politicize all this, then we can't do business," he added, referring to the Canadian Industry Ministry's review of CNOOC Ltd's proposal to buy the Canadian oil and gas producer.
The deal, if completed, would mark the first outright takeover of a large Canadian energy producer by a Chinese state-owned enterprise. The ambassador also said negotiating a full free-trade agreement within a decade would be the best way of assuring fair, two-way trade and investment between China and Canada. "It's time to open up each other's markets," Zhang said in remarks that coincide with Chinese Commerce Minister Chen Deming's visit to Canada. "It's high time to do the exploratory work on the possibility of a free-trade agreement." The newspaper said it was the first time that a senior Chinese representative called for early, accelerated talks on a free-trade deal. Concern that China has unfairly limited Canadian companies from investing there is one of the issues affecting the debate within Canada on whether the government should approve CNOOC's bid for Nexen. Industry Ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada.
CNOOC, whose offer has already been endorsed by Nexen shareholders, said it did not expect Chen to raise its sensitive takeover bid during talks with the Canadian government. But Canadian Trade Minister Ed Fast fully expects to discuss ways to expand Canada's relationship with China when he meets with Chen on Sunday, Fast's spokesman said on Saturday.
"Canada wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides," spokesman Rudy Husny said in an emailed statement. "Minister Fast will continue this discussion when he meets with his counterpart tomorrow in Vancouver."
Canada's priority is to remove what it considers to be Chinese trade barriers on goods and services, and increase exports such as lumber, grains, beef and value-added products, Husny said.
In the Globe interview, Zhang said a free-trade treaty would go a long way toward expanding trade and investment between the two countries, an important goal for Canadian Prime Minister Stephen Harper.
Harper wants to ease the dependence of Canada's export-oriented economy on the United States, its main trade partner.
Although Canada is seeking substantial foreign investment in its oil and gas industry, the CNOOC move is raising concern inside the cabinet, where some members are wary of letting a Chinese state-owned enterprise buy up domestic assets.
Zhang said Canadian fears over China's intentions are unfounded. "We are not coming to control your resources," he said.
http://timesofindia.indiatimes.com/world/china/China-envoy-warns-Canada-against-politicizing-Nexen-deal/articleshow/16511186.cms
Perhaps Chinese envoy should pay a visit to defence.pk then he will understand that what is happening in the world. If Canada supports the deal,its good but GOD forbids if Canada does not allow this to happen,then they are American puppet. No,not according to me. As per Chinese posters.