July 29, 2012
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№ 6 (June 2012)

CNOOC to Acquire Nexen for $15.1B

China-based CNOOC Limited will expand its international business and resource base by acquiring Calgary-based Nexen Inc. in an acquisition valued at $15.1 billion.

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Under the agreement, CNOOC will acquire all of the outstanding common shares of Nexen for $27.50 per share in cash. The purchase price represents a premium of 61 percent to Nexen's common share closing price on the New York Stock Exchange on July 20.

The acquisition will allow CNOOC to deliver long-term, sustainable growth, and will deliver significant and immediate value to Nexen shareholders, said officials with both companies. Nexen Board Chairman Barry Jackson said the board is recommending shareholders vote in favor of the transaction.

CNOOC will bring greater financial capacity to better realize the full potential of Nexen's significant resource base, with plans to invest significant capital in Canada and in Nexen's other international assets.

Nexen's will complement CNOOC's large offshore production footprint in China and extends CNOOC 's global presence with a high-quality asset base in many of the world's most significant producing regions.

"The acquisition reflects our strong belief in Nexen's rich and diverse portfolio of assets and world-class management and employees," said CNOOC Chairman Wang Yilin. "This is an exciting opportunity for us to build on our existing joint venture relationship with Nexen in Canada, and to acquire a leading international platform in the process."

Nexen has operations in Western Canada, the UK North Sea, the Gulf of Mexico and offshore Nigeria, and is focused on conventional oil and gas, oil sands and shale gas, the companies said in a joint statement. Nexen management's current mandate will be expanded to include all of CNOOC North American and Caribbean assets.

Nexen had average production of 207,000 barrels of oil equivalent per day after royalties in second quarter 2012. The company had 900 million barrels of oil equivalent (MMboe) of proved reserves and 1,122 MMboe of probable reserves as of Dec. 31, 2011.

As part of the acquisition, CNOOC will make Calgary the head office of its North and Central American operations. This office will oversee the operation and growth of Nexen's assets in North and South America, Europe and West Africa and CNOOC 's portfolio in Canada, the U.S. and Central America.

CNOOC plans to retain Nexen's current management team and employees, and intends to list its common shares on the Toronto Stock Exchange.

CNOOC has invested $2.7 billion (CAD $2.8 billion) in Canada since 2005, including investment stakes in MEG Energy, OPTI Canada, Nexen's partner in the Long Lake steam assisted gravity drainage production facilities, and a 60 percent interest in Northern Cross (Yukon) Limited.

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