CALGARY – Chinese state-owned firm CNOOC Ltd. is now officially in control of Calgary oil and gas producer Nexen Inc. (TSX:NXY).
CNOOC’s $15.1 billion takeover of Nexen, first announced last July, was completed on Monday, marking China’s largest-ever successful overseas acquisition.
Kevin Reinhart, who had been serving as interim CEO since January 2012, will remain in charge of Nexen’s operations in the oilsands, B.C. shale fields, North Sea, West Africa and Gulf of Mexico.
CNOOC Ltd. CEO Li Fanrong will serve as chairman of Nexen’s new board of directors, which includes members from both the Chinese and Canadian companies.
All of Nexen’s existing assets, as well as CNOOC’s North and Central American operations, will be managed out of Nexen’s Calgary headquarters.
Nexen shares are expected to be delisted from the Toronto Stock Exchange in a few trading days. They will cease being traded on the New York Stock Exchange before markets open Tuesday, and will subsequently be delisted.
The CNOOC-Nexen deal touched off a great deal of controversy about what degree foreign state-owned control of Canadian resources is acceptable.
That the deal came from a Chinese company, in particular, raised concerns in some quarters about doing business with a non-democratic state.
But there was also acknowledgment that Canada does not have the capital necessary to develop its own resources alone, and that overseas investment is needed.
The Conservative government finally decided in December that the deal would be of “net benefit” to Canada under the Investment Canada Act, but that future deals of that type would be held to greater scrutiny.
Ottawa has signalled that deals that give state-owned enterprises control over the oilsands would only be allowed in “exceptional circumstances” from now on, but that partnership deals would continue to bring capital into the sector.
About two weeks ago, Nexen received U.S. government approval.
Earlier Monday, Nexen posted results for its last quarter as an independent company.
Citing impairment charges on natural gas properties in the U.S. and Canada and costs associated with its Long Lake oilsands project, Nexen said its net loss in the three months ended in December was $6 million, or two cents per diluted share.
That was a big reversal from last year’s fourth-quarter profit of $43 million or eight cents per share.
Net sales from continuing operations were $1.58 billion, down from $1.66 billion in the same 2011 period.
For the year as a whole, Nexen said income dropped 52 per cent, which primarily reflected “the impact of higher share-based compensation expense as a result of the increase in our share price in part due to the proposed CNOOC Ltd. acquisition and to lower gains from asset dispositions.”
Last year, net income included pre-tax gains of $386 million from asset dispositions compared to $194 million in 2012.
Monday, February 25, 2013