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Canada OKs CNOOC's takeover bid for Nexen

Published on NewsOK Modified: December 7, 2012 at 8:29 pm •  Published: December 7, 2012

But Harper has lobbied the Chinese to invest in Canada's energy sector and has said foreign investment is needed to develop Canada's vast oil and gas deposits. Turning down CNOOC's bid would have harmed relations with China.

China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested billions in Canadian energy in recent years.

Harper said the Nexen transaction did not raise fears. Analysts say a company like Suncor, Canada's largest oil company, is off limits.

Nexen, a mid-tier energy company in Canada, operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East, with its biggest reserves in the Canadian oil sands. It produced an average of 213,000 barrels of oil a day in the second quarter of this year. The acquisition vastly expands CNOOC's holdings in Canada, where the company has already invested about $2.8 billion.

Nexen's board approved the takeover in July after CNOOC offered a 62 percent premium on the stock price. Shareholders voted overwhelmingly to support the deal in September. The deal still needs approval in Britain and the U.S. where Nexen also has assets.

The stock has long traded at 10 percent discount to the offer on fears Canada would not approve the takeover. The stock jumped 15 percent, or $3.43 to $26.95, in afterhours trading in New York after closing down 6.5 percent in the regular session after the government said an announcement would be made after the close. Progress also traded down 5.4 percent in the regular session on fears Canada wouldn't approve that deal.

In an apparent show of commitment to Canada's interests, CNOOC is pledging to set up a regional headquarters in Calgary, Alberta, where Nexen is based. It also says it will keep the Canadian company's management and projects in place and list shares on the Canadian bourse in Toronto.

Petronas has also made a series of promises in the proposed takeover of Progress.

John Manley, president of the Canadian Council of Chief Executives, applauded the decisions to approve the deals, noting Canada needs foreign capital.

"The decision to approve the acquisitions of Nexen Inc. and Progress Energy Resources Corp. sends a positive signal to investors in Canada and around the world," Manley said.

First Asset Investment Management Analyst John Stephenson said foreign state-owned companies will continue to grab minority stakes in Canada's oil sector.