China's CNOOC hopeful on Nexen bid; raises FY output goal

Wed Oct 24, 2012 7:11am EDT
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By Charlie Zhu

HONG KONG (Reuters) - CNOOC Ltd (0883.HK: Quote), China's top offshore oil and gas producer, said on Wednesday it was working to win regulatory approval from Canada this year for its $15.1 billion bid for energy producer Nexen NXY.TO NXY.N.

"Our team is still working to obtain approval," Chief Financial Officer Zhong Hua told reporters on a conference call about CNOOC's third-quarter results. "We still expect to get the approval by the end of the year."

His comments came days after Ottawa held up Malaysian state oil company Petronas' $5.2 billion bid for Canada's Progress Energy Resources Corp (PRQ.TO: Quote), a move that raised concerns that the Chinese offer for Nexen - which would be China's biggest overseas takeover - could also be blocked.

Under a barrage of questioning from reporters, Zhong said CNOOC had submitted all the documents requested by Canadian and U.S. regulators for the proposed deal. He declined to elaborate further.

A senior industry source told Reuters that CNOOC was shocked by Canada's decision last weekend to block the Petronas bid, but remained hopeful it would win Canada's backing for its own deal.

"It's a shock to everybody, but when you look more at the detail you feel it's not as bad as it looks," said the source, who asked not to be named as he was not authorized to speak to the media. He noted the Canadian government needed time to rechart its policy on foreign takeovers of Canadian companies.

CNOOC is confident its bid will go through as only about a quarter of Nexen's assets are in Canada, while Progress Energy's operations are centered in Canada, the source said, adding Canada needs China to help develop its vast oil sands industry and buy its crude oil.

"This is a hugely different deal," he said, noting also that CNOOC had promised to keep all of Nexen's staff, list shares in Toronto and make Calgary the headquarters for CNOOC's operations in the Americas.   Continued...