CNOOC buys Nexen in China’s largest overseas acquisition

CNOOC agreed to pay $15.1 billion in cash to acquire Canada’s Nexen in the biggest overseas takeover by a Chinese company.

China’s largest offshore oil and natural-gas explorer is paying $27.50 for each common share, a premium of 61 percent to Calgary-based Nexen’s closing price on July 20, according to its statement to the Hong Kong stock exchange today. Nexen’s board recommended the deal to its shareholders…

Nexen’s oil and gas assets include production platforms in the North Sea, the Gulf of Mexico and in Nigeria, as well as oil-sands reserves at Long Lake, Alberta, where it already produces crude in a joint venture with CNOOC. Those assets produced 207,000 barrels a day in the second quarter, which would boost the Chinese company’s output by about 20 percent. About 28 percent of Nexen’s current production is in Canada.

“Given Nexen’s strong international diversity, we believe it would be difficult for regulators to oppose the transaction on this front,” said Andrew Potter at Canadian Imperial Bank of Commerce…

Canadians are more likely to make business decisions based on commercial interests – as opposed to the Cold Warriors in the American Congress.

The Nexen takeover comes as Canadian companies prepare to build new pipelines for transporting Canadian fossil fuel to Asia in an effort to reduce its dependency on the U.S. market, which has depressed prices for crude produced in Alberta’s oil sands and the Bakken in Saskatchewan…

“The Chinese have shown that they’re good at buying assets that have long-term value,” said Jennifer Stevenson, who helps oversee about C$5 billion in assets at Dynamic Funds in Calgary and doesn’t own Nexen shares. “This deal signifies that people who understand the value of oil and gas assets are willing to pay for them.”

“This agreement diversifies our reserve base by adding to our presence in Canada while providing high quality assets,” Cnooc Chief Executive Officer Li Fanrong said today in a conference call with reporters. “We are in Canada to invest.”

The cowards in Congress are afraid to compete on any level…with anyone. That’s core to the imperial mindset. The “we” who have the only perfect democracy, the we who spent a great portion of our history denying democracy and civil rights to citizens of this nation.

Add in the ideology-driven foolishness especially rampant in an election year and I doubt if the Obama Administration would have the courage to play with the big boys. Even if those competitors from the far side of the Pacific Rim are handicapped by trying to get from the 19th Century to the 21st – in about 3 decades.

Every time China tries to spend money in the US, ideological curs yap and run away from the deals. You and I know in advance that is what will happen unless what passes for governance is made to grow into leadership.

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