HONG KONG - CNOOC Ltd. said Wednesday it is working to secure the Canadian government's approval of its US $15.1 billion bid to acquire Nexen Inc. and expects to complete the deal before the end of the year.
The comments by the Chinese state-controlled oil giant come as Canada's rejection of an investment by Malaysia's national oil company has cast doubt over what would be China's biggest overseas deal.
"We will try our best to complete the deal and will send the relevant information to governments under their requirements. However, I can't comment on the approval process," Chief Financial Officer Zhong Hua told reporters in a teleconference Wednesday on the company's revenue for the third quarter.
CNOOC and other Chinese oil and gas giants have gone on a shopping spree in recent years for conventional and unconventional oil and gas assets, including deals that have given their energy-thirsty nation a long-coveted foothold in North America, a region known for innovative new drilling techniques. These deals have raised concerns among regulators and politicians who worry about the effect of such investments on national energy security and the companies' ties to Beijing.
CNOOC has been the most aggressive of the oil giants in acquiring overseas shale and conventional oil-and-gas assets as it strives to compensate for declining output at home.
In 2005, CNOOC proposed to acquire Unocal for US $18.5 billion, but the Chinese company pulled the bid amid strong political opposition in the U.S. Chinese companies have since shown greater subtlety in striking deals in the U.S. and Canada, though the Nexen deal may present the biggest test yet of what they have learned.
Canada could rule on the CNOOC-Nexen deal as early as mid-November, amid a heated debate in the country on how big a role state-owned companies should play in the domestic economy, especially the resource field. Ottawa refused to allow a US $5.21 billion bid by Malaysian national oil company Petroliam Nasional Bhd., or Petronas, to acquire Canadian natural-gas producer Progress Energy Resources over the weekend, saying it didn't offer a net benefit for the Canadian economy, as required under Canada's foreign investment laws.
Barclays analysts said the decision to block the Petronas creates significant uncertainties over the CNOOC-Nexen deal.
"Given the uncertain reasoning for not approving the Progress acquisition, we believe that the merger and acquisition prospects for Canadian energy are severely diminished for the time being," Barclays said.
Nexen, one of Canada's largest independent energy producers, owns assets in Canada's oil sands, a mixture of sand and a tar-like ultra-heavy crude called bitumen that can be converted to oil products, as well as in the U.S. Gulf of Mexico and the North Sea. Canada's oil sands represent the third largest oil reserves in the world, but production has only become feasible in recent years because of high crude oil prices and improvements in technology.
CNOOC, China's biggest offshore oil and gas producer by output, on Wednesday raised its 2012 net oil and gas output target after the oil company reported a 5.2% increase in third-quarter revenue on the back of higher oil and gas production growth.
Revenue for the three months ended Sept. 30 rose to 48.96 billion yuan (US $7.73 billion) from CNY46.52 billion a year earlier. The company provides net profit figures only for the first half and full year.
Total net oil and gas output rose 8.5% to 87.8 million barrels of oil equivalent from 80.9 million, thanks to stronger contributions from domestic and overseas projects. The Beijing-based company said it expects to produce 335 million-345 million barrels of oil equivalent in 2012, up from its previous target of 330 million-340 million.
The average selling price of the company's crude oil in the third quarter fell 6.5% to US $104.74 a barrel.
Copyright (c) 2012 Dow Jones & Company, Inc.
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