07-Dec-2012

Nexen Sale to CNOOC

Nexen stock (NXY) was extremely volatile in regular trading on Dec 7th, 2012, ahead of the government of Canada announcement made after the close of North American stock markets. The stock traded in a range from $21.07 and $26.00, closing at $23.52 for a -6.56% decline for the day. NXY is up 14.75% at $26.99 in after-hours trading as of 7:39pm EST.

Nexen - CNOOC

The Nexen deal is the largest successful foreign takeover ever by a Chinese company. The ruling, closely watched by investors and politicians, followed months of heated debate over how much of Canada's energy sector, and especially its oil sands, should be absorbed by companies run by other governments.

Following the Conservative government's approval of the $15.1 billion sale of Calgary-based Nexen Inc to the state-owned Chinese enterprise CNOOC Ltd, Prime Minister Stephen Harper announced that "Canada is not for sale" and served notice that future investments by state-owned enterprises would face much tighter scrutiny.

A quicklist of facts about Nexen and CNOOC

Source: The Canadian Press
  • Nexen is a global oil and gas company that produced 207,000 barrels of oil equivalent per day at the end of 2011.
  • About 30 per cent of Nexen's production comes from its Canadian operations, with the rest coming from offshore platforms in the North Sea, Gulf of Mexico and West Africa.
  • CNOOC Ltd is China's largest offshore oil and gas producer and is one of the largest oil and gas exploration and production companies in the world. At the end of 2011, it had 909,000 barrels of oil equivalent per day of production. Its Beijing-based parent, China National Offshore Oil Co., operates directly under the State-owned Assets Supervision and Administration Commission of the State Council of the People's Republic of China.
  • CNOOC Ltd shares trade on Hong Kong and New York stock exchanges.
  • On July 23, Nexen announced it had accepted CNOOC Ltd's all-cash offer of $27.50 per share, worth $15.1 billion. In a circular to shareholders a month later, Nexen revealed it had rejected two earlier CNOOC offers as too low.
  • A premium of 61% over Nexen's closing share price on the trading day before the deal.
  • CNOOC and Nexen had a relationship well before they announced their deal. In 2011, CNOOC acquired Opti Canada Inc, Nexen's beleaguered partner in the Long Lake oil sands project and the two have since been working together on that project.
  • Later in 2011, CNOOC and Nexen formed a joint venture in the Gulf of Mexico.
  • Around the same time, Nexen also agreed to sell a 40% interest in some of its northeastern B.C. shale natural gas lands to a Japanese-led consortium.

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