Nexen profit falls, still expects CNOOC deal by year-end

Thu Oct 25, 2012 8:00am EDT
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(Reuters) - Canadian oil and gas producer Nexen Inc said it still expects a $15.1 billion takeover bid by China's CNOOC Ltd to close in the current quarter.

Nexen, which reported a 71 percent fall in third-quarter profit on Thursday, struck a takeover deal with CNOOC in July but the politically sensitive deal remains in limbo as the Canadian government determines whether it is of "net benefit" to the country.

CNOOC's chief financial officer, Zhong Hua, told reporters on Wednesday that his company expected to get approval for the takeover by the end of the year.

Ottawa has promised to release a set of clear guidelines for large foreign investments when it announces its decision on the CNOOC takeover bid around November 11.

Doubts about the fate of the CNOOC bid increased last week when Canada blocked a $5.2 billion bid by Malaysian state oil company Petronas for Progress Energy Resources Corp.

Nexen's shares have traded well below CNOOC's bid price of $27.50 since the deal was announced, reflecting concerns that Ottawa may block the deal, which has raised concerns about investments in Canadian resource projects by companies linked to foreign governments.

The stock closed at C$23.63 in Toronto and $23.76 in New York on Wednesday.

"We continue to expect the arrangement to close in the fourth quarter of 2012," Nexen said in its earnings statement.

Nexen said its net income fell to C$59 million ($59.5 million), or 11 Canadian cents per share, in the quarter, from C$200 million, or 32 Canadian cents per share, a year earlier.   Continued...

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