China's CNOOC confident on Nexen deal after Canada talks: sources

Thu Sep 27, 2012 6:10am EDT
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By Charlie Zhu and Chen Aizhu

HONG KONG/BEIJING (Reuters) - China's CNOOC Ltd 0883.HK believes it is poised to win Canada's go-ahead for the $15.1 billion purchase of oil producer Nexen Inc NXY.TO, after talks with provincial leaders boosted its confidence that Canada values China as an investor in its huge oil sands sector and as a future energy customer, sources said.

CNOOC's proposed acquisition is raising worries inside Canada's federal cabinet, where some are wary of letting a Chinese state-owned enterprise buy up domestic assets. Some Canadian newspapers also published polls recently showing that a majority of Canadians surveyed opposed the sale -- fuelling concerns among investors that the deal might be blocked.

Shares of Nexen have been trading well below CNOOC's C$27.50 per share offer, a 61 percent premium to the price of Nexen shares before the bid, due to concerns that public opposition will convince the government to block the deal. It closed at C$24.91 in Toronto on Wednesday.

But in a sign that Ottawa would likely approve the deal, a delegation of Canadian provincial leaders held meetings with CNOOC in Beijing earlier this month and none of the Canadian premiers voiced concern about the proposed deal, sources familiar with the meetings told Reuters.

CNOOC Chief Executive Officer Li Fanrong told the premiers -- who do not sit on the committee reviewing the CNOOC bid but are believed to be highly influential in the review process -- that the deal had been structured to meet Canadian regulations and benefit Canada as well, the sources said.

"Mr. Li did a very good job in his meeting with premiers, trying to demonstrate that CNOOC was not interested in extracting resources but they are there to be part of the community, to benefit Canadians," one of the sources said.

Asked whether any of the premiers expressed support for the deal, he said: "I think you may not hear a premier stand up and say: This is a great deal for Canada. But what's most important is nobody stands up and says this is a bad deal for Canada. So I think this will be approved."

CNOOC, which has won approval from Nexen shareholders for the acquisition, has promised to retain all Nexen employees and make Calgary its headquarters for its Americas operations. It will also pursue a secondary listing of its shares in Toronto.   Continued...

A man walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol