CNOOC-Nexen: Waiting for Signs From Beijing 中海油收购尼克森：等待中国政府的信号
Oil major CNOOC (HKEx: 883; NYSE: CEO) has just released its latest quarter results that look generally upbeat, but media have predictably focused instead on the company’s pending $15 billion bid for Nexen (Toronto: NXY) which is still awaiting approval by the Canadian government. Since everyone else is guessing on whether Ottawa will ultimately approve this deal, I’ll go ahead and add my name to the list and predict the deal will get approved when Canada announces its decision next month. But there’s one caveat to my prediction, namely that Beijing will need to give some kind of signal — the more openly, the better — that it is willing to give Canadian companies similar access to the Chinese market where state-run firms currently dominate the resources sector.
Since CNOOC has just announced its latest quarterly results, I suppose we should at least take a quick look at them before looking at the Nexen deal. (results announcement) Probably the most noteworthy element of those results is that CNOOC has raised its output target for this year, providing a welcome bit of news for a company that had to continually lower its targets last year due to problems at a joint venture drilling operation with ConocoPhillips (NYSE: COP) off the northeast China coast. I suspect that investors will welcome the news that the ConocoPhillips joint venture problems finally seem to be solved, and perhaps we’ll see a positive bump in CNOOC’s shares over the next few days.
But returning to Nexen, there are a few key factors at play in the government’s decision on whether to approve this deal. At the most basic level, the government of Prime Minister Stephen Harper surely realizes the deal poses little or no risk to national security, which is really the only major reason for vetoing it.
At the same time, Harper has said he will take public opinion into account when considering whether to approve the purchase, which would be the largest takeover of a North American firm by a Chinese counterpart. A steady series of polls that have come out since the deal was first announced in July suggest that many Canadians feel uneasy about having such a major company taken over by the Chinese. In the latest of those, some 64 percent of people polled in Nexen’s home province of Alberta don’t think full ownership of a major Canadian company was acceptable. (English article)
Nexen shareholders were also concerned by Canada’s decision last week to hold up approval on the proposed purchase of another major firm, Progress Energy Resources, by Malaysia’s Petronas. But those fears seem have receded this week, as Canada has sent more conciliatory signals that it could still approve the deal.
The fact of the matter is that Canada sorely needs these kinds of outside investment dollars to develop its energy resources, as such funds are lacking from domestic players and unlikely to come from many financially struggling sources in other western markets. CNOOC has repeatedly said it is hopeful the deal will be approved, and Harper himself has indicated he would like to see some reciprocal gestures from Beijing that it will allow similar treatment for Canadian companies. Accordingly, I expect that CNOOC is quietly using its government connections to lobby Beijing to provide some such signals in the next few weeks. Such signals will give the Harper government the justification it needs to OK the deal, whose chances of approval I would put at about 80 percent.
Bottom line: CNOOC’s bid to purchase Nexen now stands an 80 percent chance of approval, but first Beijing must show it is willing to allow similar investments in China by Canadian firms.
Related postings 相关文章:
