As you no doubt know, yesterday China National Offshore Oil Corporation made a $15 billion, 61% premium to market, bid for Nexen Inc. Nexen’s portfolio includes:

conventional oil and gas assets in the North Sea, the Gulf of Mexico, and offshore West Africa;
oil sands investments and assets in Alberta, Canada; and,
less consequential assets in Columbia and Poland.

Aside from the obvious, my comments are:

this is but one more example of China’s interest and reach with respect to assets it perceives strategic to it in the long term;
it is unlikely to be a transaction the Canadian government will interfere with;
it reinforces questions related to the Keystone pipeline and its turndown by U.S. President Obama earlier this year;
it ought to cause America and American politicians to ‘sit up very straight and take notice of what is going on the western Canada resource landscape;
it speaks directly to the financial markets pricing of assets China and others may find strategic – in spite of, or perhaps because of, the current difficult and uncertain economic times; and,
a 61% ‘premium to market’ is ‘large by convention’, and causes one to wonder whether there were or are other potential bidders’

Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is also the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining and Oil & Gas Companies listed on the Toronto and Venture Exchanges. Ian can be contacted at icampbell@srddi.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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