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Canada OKs Nexen-CNOOC Deal

Late Friday the government of Canada gave its nod to the deal, which has shareholder approvals but needs OKs from the U.S. and British governments.

The Canadian government late Friday approved the C$15.1 billion takeover of Canada's Nexen Inc. by CNOOC Ltd., an arm of state-controlled China National Offshore Oil Co.

Nexen shareholders had voted to accept the offer back in September (see NGI, Sept. 24), but opposition to the deal by Canadians was fairly strong, according to multiple polls (see NGI, Oct. 18). The deal still needs to win the approval of both British and U.S. governments.

The cash offer of $27.50/share offer for Nexen was made in July (see NGI, July 24). and represented a premium of 61% to the closing price of Nexen common shares on July 20 and a premium of 66% to Nexen's 20 trading-day volume-weighted average share price. Total cash consideration of about US$15.1 billion would be paid for Nexen's common and preferred shares, and Nexen's current debt of about US$4.3 billion will remain outstanding.

"Nexen will complement CNOOC Ltd.'s large offshore production footprint in China and extends CNOOC Ltd.'s global presence with a high-quality asset base in many of the world's most significant producing regions -- including Western Canada, the UK North Sea, the Gulf of Mexico and offshore Nigeria -- focused on conventional oil and gas, oilsands and shale gas," CNOOC said at the time. "In addition, Nexen management's current mandate will be expanded to include all of CNOOC Ltd.'s North American and Caribbean assets."

Nexen had average production of 207,000 boe/d (after royalties) in the second quarter. Nexen had 900 million boe of proved reserves and 1.12 billion boe of probable reserves as of Dec. 31. In addition, at the end of last year Nexen had "best estimate contingent resources" of 5.6 billion boe, in accordance with Canadian accounting standards, predominantly in the Canadian oilsands.

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