CNOOC Acquires Canadian Energy Giant Nexen

China National Offshore Oil Corporation announced yesterday that it has reached a definitive agreement with Canada’s energy company Nexen. CNOOC will purchase all ordinary shares of Nexen in cash at a price of $27.50 per share. The total transaction price is approximately $15.1 billion.

The purchase price was 61% higher than the closing price of Nexen's stocks traded on the New York Stock Exchange on July 20, 2012, and 66% higher than the volume weighted average price of the stocks during the 20 trading days ended on July 20. Nixon’s current $4.3 billion debt is maintained. The transaction is expected to be completed in the fourth quarter of 2012.

The Nexen board of directors agreed that the transaction is in the best interests of Nexen and its shareholders, and from a financial point of view, the offer to Nexen shareholders is fair. In addition, Nexen's board of directors unanimously recommended that Nexen's common stockholders and preferred stockholders vote for the final agreement at the extraordinary general meeting held on or before September 21, 2012. In addition, Nexen's directors and senior management also plan to vote in favor of this transaction.

Wang Yilin, chairman of CNOOC, stated that through the acquisition of Nexen, CNOOC will further expand its overseas business and resource reserves to achieve long-term and sustainable development. The outstanding asset portfolio of Nexen Company is not only a good complement to CNOOC. At the same time, it also enabled CNOOC's global distribution to be strengthened, CNOOC's business in Canada, Nigeria and the Gulf of Mexico to be strengthened, and access to the resource-rich North Sea region of the United Kingdom.

The major shareholder of CNOOC has approved the transaction. This is CNOOC’s second acquisition of a large-scale North American energy company after it failed to acquire a strong political resistance following the acquisition of Unocal in 2005.

Nexen is an independent Canadian global energy company listed on the Toronto and New York stock exchanges. It focuses on three development strategies: oil sands, shale gas, and conventional oil and gas exploration and development in the deep waters of the North Sea, West Africa, and the Gulf of Mexico.

CNOOC is China's largest offshore crude oil and natural gas producer and a listed subsidiary of China National Offshore Oil Corporation. As of December 31, 2011, CNOOC Limited had a net proven reserves of approximately 3.19 billion barrels of oil equivalent, and the average daily net production was 909,000 barrels of oil equivalent. CNOOC was established in 1999 and listed on the Hong Kong Stock Exchange and the New York Stock Exchange in 2001.

After the transaction is completed, CNOOC plans to use Calgary, Canada as its headquarters in North America and Central America to manage and develop Nexen’s assets in North America, South America, Europe, and West Africa and CNOOC’s assets in Canada, the United States, and Central America. Nexen’s assets in the United Kingdom, the United States, and other countries will continue to be managed by Nexen’s local offices, and CNOOC will retain all management and employees and continue to work with local suppliers.