CNOOC seals Nexen acquisition

China's largest offshore oil producer announced Tuesday it had completed its acquisition of Canadian oil and gas company Nexen Inc, making it the largest overseas takeover by a Chinese company and opening up opportunities for Chinese companies to complete more energy deals in developed countries.

China National Offshore Oil Corporation (CNOOC) acquired Nexen's common and preferred shares at a total of $15.1 billion, CNOOC announced in a statement published on its website Tuesday.

"The acquisition will give the company a leading international platform for development. We believe the acquisition is in line with the company's development strategy and will bring long-term benefits to our shareholders," Wang Yilin, chairman of CNOOC, said in the statement.

Kevin Reinhart will continue to serve as chief executive of Nexen, which will operate as a wholly-owned subsidiary of CNOOC, while Li Fanrong, CEO of CNOOC, will chair the new board of Nexen, the statement said.

The acquisition exceeded the total value of Chinese investment in Canada at the end of 2011, which stood at $10.7 billion, official data showed.

"The most significant impact of the deal is that China's companies have successfully cracked the market of developed countries by successfully completing the acquisition deal with Canada," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times, noting that most of China's past energy acquisitions were made with underdeveloped countries or countries in turbulence.

"It opens up more opportunities for Chinese energy companies in developed countries. After being transformed into multinational companies through overseas acquisitions and mergers, Chinese companies could even set up gas stations overseas in the future," Lin said.

The deal was first announced by CNOOC in July 2012, and was approved by Canadian regulators in December.

On February 12, the last major hurdle was cleared after the Committee on Foreign Investment in the US gave its nod for the takeover.

The US had a say in the deal because Nexen, based in Calgary, Alberta, controls exploration and production assets in the Gulf of Mexico.

"Chinese companies have encountered a lot of obstacles in investing abroad partly because they are ignorant of foreign laws, culture and customs, and partly because foreign companies are hostile to Chinese companies and reluctant to trust their Chinese counterparts," Yang Hongwei, director of the energy efficiency center at the National Development and Reform Commission, told the Global Times.

The closing of the deal came as Nexen reported a net loss in the fourth quarter worth C$6 million ($5.9 million) on Monday, compared with a profit of C$43 million in the same period of the previous year.

"It is too early to conclude whether the deal is worth the money. The companies that are being sold are usually not performing very well in the market. The biggest challenge for CNOOC is how it can manage and develop the newly acquired asset over the next 10 years," Lin said.

The deal also came after the China Petrochemical Corporation (Sinopec) announced Monday it would purchase 50 percent of the stakes of the US' second-largest national gas developer, Chesapeake Energy Corporation, in its oil and gas assets in Oklahoma at $1.02 billion.

China's three major energy companies - Sinopec, CNOOC and China National Petroleum Corporation - closed acquisition deals overseas worth a total of $25.4 billion in 2012, exceeding the value in the previous years, the Xinhua News Agency reported earlier this month.

"Chinese companies should aim to achieve success in investing abroad instead of seeking large-value deals. In doing so, they must try their best to get familiar with host countries' investment environment, legal system, financial markets and customs to prepare them for any potential risks," Xu Baoli, director of the Competitiveness Research Department of the State-owned Assets Supervision and Administration Commission, told the Global Times.