Chinese energy giant
) has cleared the final obstacle for its acquisition of the
Calgary, Alberta-based energy producer
). The deal price is approximately $15.1 billion in cash.
CNOOC LTD ADR (CEO): Free Stock Analysis
NEXEN INC (NXY): Free Stock Analysis Report
CHINA PETRO&CHM (SNP): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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CNOOC has already received the regulatory approvals in Europe and
Canada. However, it needed the U.S. approval as Nexen has
operations in the country. Now, the Committee on Foreign
Investment in the United States (CFIUS) had finally given its
green signal. The deal is expected to close around Feb. 25, seven
months after China's biggest offshore oil and gas producer made
its bid of $27.50 a share.
Although the CFIUS approval is likely to be viewed as a positive
development for CNOOC, it came on the heels of deeper concerns
and further discussions. One of the U.S. legislators planned to
bring in legislation to obstruct any future transaction, like the
Nexen one, involving the transfer of royalty-free leases.
Again, one of the representatives of the House Natural Resources
Committee, Edward Markey, said that Chinese oil corporations must
not be allowed to drill in the U.S. Gulf of Mexico region without
giving any royalty to the country's taxpayers.
However, this deal marks a significant milestone for CNOOC as it
gets hold of Nexen's biggest reserves in the Canadian oil sands.
Calgary, Alberta-based Nexen operates in western Canada, the Gulf
of Mexico, North Sea, Africa and the Middle East. Apart from oil
sands, Nexen remains dynamic in natural gas exploration in shale
rock formations. It owns approximately 300,000 acres of shale-gas
blocks in the Horn River Basin in British Columbia.
As the world's second-largest economy, China has a huge energy
requirement. The Nexen acquisition bid foregrounds not only a
bold attempt by CNOOC but also of other Chinese biggies to make
deeper inroads into the international energy markets with the
specific aim of meeting domestic demand. We note that the CNOOC
bid for Nexen marks the biggest Chinese takeover attempt so far.
Recently, another Chinese energy giant
China Petroleum & Chemical Corp.
), aka Sinopec, planned to acquire international upstream oil and
gas assets from its parent company, China Petrochemical Corp., or
Sinopec Group, in order to spread its footprint globally. In this
regard, Sinopec is eyeing assets in countries such as the U.K.,
Russia, Colombia and Kazakhstan.
The transaction - expected in April this year - would position
Sinopec on the same platform with other international energy
CNOOC currently retains a Zacks Rank #3 (short-term Hold