Canadian Court Clears Cnooc's Planned $15.1 Billion Acquisition of Nexen

Canadian Court Clears Cnooc's Planned $15.1 Billion Acquisition of Nexen

HONG KONG--Cnooc Ltd.'s (CEO) planned $15.1 billion acquisition of Nexen Inc. (NXY) took a another step toward completion after a Canadian court cleared the deal.

The Court of Queen's Bench of Alberta's decision, announced Friday by the state-controlled Chinese oil giant, comes after Nexen's shareholders voted overwhelmingly in favor of Cnooc's offer, which included a large premium, at a meeting in the Canadian energy company's home base of Calgary on Thursday.

The proposed deal, which was announced in July, must still secure regulatory approval from the governments of Canada, China and the U.S., but Cnooc expects a deal to be completed in the fourth quarter. The Chinese company's offer has sparked a debate in Canada about how big a role state-owned enterprises should have in the Canadian economy and resource development.

Cnooc is China's largest offshore oil company by production. Acquiring Nexen would allow it to secure oil and gas reserves in western Canada, the North Sea, the U.S. Gulf of Mexico and offshore Nigeria. Cnooc said earlier the deal would boost its oil and gas output by about 20% and enlarge its oil and gas reserves by nearly a third.

The latest developments helped push Cnooc's Hong Kong-listed up 1.7% to HK$15.90 as of 0502 GMT, after rising as high as HK$15.94 earlier in the session. The benchmark Hang Seng Index was up 0.84%.

The proposed Nexen deal comes amid a scramble to secure overseas reserves of fossil fuels among resource-hungry Chinese energy companies hampered by developments at home.

Cnooc's ambitions to drill in the South China Sea are complicated by drilling costs that can reach $100 million per deep-water well, according to analysts, as well as by political tensions over continuing territorial claims to the waters by China, Vietnam, the Philippines, and others. China is in only the earliest stages of exploring for shale gas, which is trapped in rock formations and is plentiful but difficult to extract.

Cnooc has set a target of expanding its oil and gas output by between 6% and 10% annually between 2011 and 2015. This means the company will need to produce between 419 million and 486 million barrels of oil and gas a year by 2015, up from 331.8 million barrels in 2011.

Copyright (c) 2012 Dow Jones & Company, Inc.


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PetroGuy | Oct. 3, 2012
Heidi - are we the only ones who care about the negative potential behind this subject ? I have an alternative proposal to the Chinese that will help Canada since we seem to focus on other issues and ignore the big picture. Instead of CNOOC buying NEXEN - how about they buy Quebec ? Quebec is always wanting attention like some child in distress. CNOOC likes to dictate like some over powering parent. Hey - well even throw in Harper to seal the deal to translate English to the Quebecers. This is how united we stand and united we fall.

PetroGuy | Sep. 21, 2012
Wake up CANADuh - Being a Canadian and having worked in China around CNOOC, I can tell you that having them comply to Canadian codes of standard, etc will be a facade. Was Canada not paying attention when the US government stopped CNOOC from buying US owned Unocal in 2005 ? This wise move by the US government allowed Chevron to merge with Unocal and keep the interests and control in the US, so US resources could not be controlled by CNOOC, which is state owned. Allow Canadian resources to be controlled by Canadians - we can`t be that hard up to allow our resources to be contolled by a foreign government are we Harper ? What next, will we allow Iran to buy some Saskatchewan uranium mines ?

Heidi | Sep. 21, 2012
Say no to the Nexen deal if the OSC made no mistake to allege Sino-forest a fraud The Ontario Securities commission stated in its fraud allegation against Sino-forest:""certain PRC forestry bureau employees obtained gifts and cash payments from Suppliers of Sino-Forest,further undermining the value of the Confirmations as evidence of ownership." If the OSC cannot even trust the Chinese government bureaus, Canadians have to ask: how can the FIPA ensure greater protection to Canadian investors when the Chinese government itself is distrusted? How can Canadians trust the Chinese to do what they promised to do in the Nexen deal or in any other business co-operation with Canada? It is obvious: either the OSC has made a mistake of distrusting the Chinese government officials and its allegation against Sino-forest is wrong, or the Chinese government is not ready to be a proper business partner of Canada yet, as the OSC has proved. A transparent review process for Sino-forest case is necessary before the Nexen deal should be allowed to go through.

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