State-controlled Chinese oil firm CNOOC today announced a £9.6billion bid for Canadian operator Nexen in a deal which would see it gain control of one of the UK North Sea’s largest oil fields.
China National Offshore Oil Corporation, the largest offshore oil and gas producer in China, would take control of the 194,000 barrels of oil per day Buzzard field in the deal.
The £2billion central North Sea Golden Eagle development and a stake in BP’s west of Shetland North Uist prospect would also come under CNOOC’s control.
CNOOC said the acquisition would complement its offshore production in China, by also giving it a foothold in Western Canada, the Gulf of Mexico and offshore Nigeria.
Announcing the deal, agreed by both Nexen and CNOOC’s board, the CNOOC said management and staffing would remain the same and that it would continue current investment plans for the maintenance and development of its UK assets.
The deal valued Nexen at a premium of 61% to its closing price on the New York Stock Exchange at the end of Friday.
A previous bid by CNOOC to buy Unocal caused a political storm in the UK in 2005, which ended with CNOOC pulling out of the deal.
Oil and Gas UK’s economics director Mike Tholen yesterday welcomed CNOOC’s entry into the North Sea.
He said: “An international investor’s acquisition of Nexen, a company with fantastic prospects in the UK following almost 10 years of development and exploration of the continental shelf, underlines the significant remaining potential of the UK oil and gas industry and its world class supply chain.
“Oil & Gas UK and its members are continuing to engage closely with the UK Government to ensure a business environment that is attractive to global companies because a diverse range of investors in the province will help maximise recovery of the UK’s oil and gas to the benefit of jobs, tax revenues and energy security.”
CNOOC said: “Nexen will complement CNOOC’s large offshore production footprint in China and extends CNOOC’s global presence with a high-quality asset base in many of the world’s most significant producing regions – including Western Canada, the UK North Sea, the Gulf of Mexico and offshore Nigeria – focused on conventional oil and gas, oil sands and shale gas.
“In addition, Nexen management’s current mandate will be expanded to include all of CNOOC’s North American and Caribbean assets.”
Nexen’s second quarter production averaged 207,000 barrels of oil per day, about 114,000 of that in the UK North Sea. The firm employs about 1,200 in the UK, full time and contractors, split between Aberdeen, Uxbridge and offshore.
It says it had 900million barrels equivalent of proved reserves as of December 31, 2011.
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