Canadian Government Approves CNOOC Takeover of Nexen

Updated: December 11, 2012 (Originally published December 9, 2012)

HONG KONG–Cnooc Ltd. (CEO), China’s largest offshore oil-and-gas producer by capacity, confirmed Saturday that the Canadian government approved its US$15.1 billion takeover bid for oil-sands operator Nexen Inc (NXY).

The approval cleared a major hurdle for the Beijing-based energy giant in completing what would be China Inc.’s biggest foreign acquisition. It is also the most ambitious bid by a foreign government-owned entity so far to enter North America’s booming energy industry.

“We are very pleased to have received Industry Canada‘s approval, which recognizes the long term economic benefits for Calgary, for Alberta, and for Canada in our proposed acquisition of Nexen,” CNOOC Chairman Wang Yilinsaid in the statement.

CNOOC will establish Calgary as the head office of its North and and Central American operations. It will also retain Nexen’s current management team and employees.

The company will invest significant capital as a long-term commitment to the development of oil and gas resources in Canada, the statement said.

The announcement came after the Canadian government earlier approved more than $20 billion in investments by foreign, government-controlled companies in its energy patch.

Cnooc and Nexen were already partners in Canada’s oil sands. The Chinese company acquired Nexen’s bankrupt partner, OPTI Canada Inc., a partner in the Long Lake oil sands project, in 2011. Cnooc launched its all-cash bid for Nexen on July 23, offering $27.50 a share, or a premium of over 60% versus the share price on the last trading day before the two companies announced their proposed transaction.

For Cnooc, the Nexen deal comes seven years after the Chinese company’s 2005 failure to acquire Unocal Corp. for $18.5 billion.

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

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