Canada Wants Chinese Reciprocity in Exchange for Nexen

Energy

Published: October 23, 2012 10:06 am

Last Updated: October 23, 2012 10:07 am

The Canadian government is nearing a ruling on the proposed $15.1 billion acquisition of Nexen Inc. (NYSE: NXY) by China’s Cnooc Ltd. (NYSE: CEO), and the government is apparently seeking reciprocity as part of its approval for the deal.

A report at Bloomberg News cites unnamed sources as saying that Canada wants China to approve several Canadian transactions in China in exchange for approval of the Cnooc-Nexen deal. A list of the deals Canada wants to go forward will be included in the foreign investment policy that the government is expected to release very soon.

Yesterday the Canadian government rejected the takeover of natural gas producer Progress Energy by the state-owned Malaysian energy firm Petronas. The rejection sent shares of Canadian oil and gas producers plummeting, including Nexen, which closed down about 4.5% yesterday.

Because about 10% of Nexen’s assets are located in the United States, the U.S. government will also need to give approval to the deal.

After an initial drop, Nexen’s shares are up 0.2% in early trading, at $24.20 in a 52-week range of $13.63 to $26.21. Cnooc is offering $27.50 a share for Nexen.

Paul Ausick

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