Nexen Up 1.5% Amid Reports $3.4 Billion Shareholder Windfall Signaled as CEO Departs


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The departure of Nexen Inc's ( NXY ) chief executive officer is leaving the door open for a takeover that may reward shareholders with a $3.3 billion windfall, Bloomberg reported. Meanwhile, NXY is up 1.5% at around $18 on the NYSE.

Bloomberg said the Canadian oil and natural-gas producer that failed to find a buyer last year climbed the most in three months with this week's announcement that CEO Marvin Romanow was exiting immediately. Once worth as much as C$22.8 billion ($22.4 billion), Nexen declined 20% during Romanow's three-year tenure and last month fell to 0.92 times book value, the lowest in at least 16 years, according to data compiled by Bloomberg.

While Calgary-based Nexen has faced setbacks with oil-sands projects such as its Long Lake operation in Alberta, it's now cheaper relative to earnings than 96% of North American oil exploration and production companies with market values greater than $1 billion, data compiled by Bloomberg show. The $9.4 billion company with oil and gas operations from West Africa to the North Sea may fetch at least a 35% premium in a takeover, Edward Jones & Co reportedly said.

"You've removed one more stumbling block with the CEO leaving," Timothy Parker, a Baltimore-based portfolio manager who oversees about $4.5 billion in natural-resource stocks for T. Rowe Price Group Inc., Nexen's largest shareholder, reportedly said. "It's cheaper than average and so there is appeal there for an acquirer because you could likely buy it at an accretive price. You could pay a good premium and it could still be accretive."

Davis Sheremata, a spokesman for Nexen, reportedly declined to comment on takeover speculation.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

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