Nexen reports loss ahead of CNOOC takeover

Mon Feb 25, 2013 2:26pm EST
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CALGARY, Alberta (Reuters) - Nexen Inc NXY.TO, whose $15.1 billion takeover by China's CNOOC Ltd is set to close this week, reported a fourth-quarter net loss on Monday as expectations for extended weakness in the North American natural gas market led to a multimillion-dollar asset impairment charge.

CNOOC's takeover of Nexen gives it a portfolio of oil sands assets in Canada and other energy holdings around the world. The deal forced Ottawa to develop policies to balance increased investment by foreign state-owned companies with the desire to keep control of strategic oil sands reserves in Canada.

In the fourth quarter, Nexen lost C$6 million ($5.9 million), or 2 Canadian cents a share, compared with a year-earlier profit of C$43 million, or 8 Canadian cents a share.

The Calgary-based company said a combination of lower estimated future gas prices and revisions to oilfield abandonment costs prompted a C$237 million non-cash impairment charge.

Revenue fell 5 percent to C$1.6 billion from C$1.7 billion.

Along with the Long Lake and Syncrude oil sands stakes in Alberta, CNOOC (0883.HK: Quote) acquires Nexen's holdings in the North Sea, offshore West Africa and the Gulf of Mexico.

CNOOC overcame its last hurdle in the way of China's largest foreign energy takeover on February 12, when the Committee on Foreign Investment in the United States cleared the deal. The companies did not indicate whether the U.S. regulator had imposed any conditions.

Canada approved the takeover late last year even though some members of Prime Minister Stephen Harper's Conservative Party had misgivings about China's human rights record.

But the federal government also insisted that CNOOC-Nexen was the last deal of its kind that it would approve, drawing a line against state-controlled companies taking majority stakes in the oil sands, the world's third-largest crude deposit.   Continued...

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