Goldman Sachs to Buy Nexen's North American Natural Gas Trading Business

Goldman Sachs Group Inc. will buy Nexen Inc.’s North American natural-gas trading business for an undisclosed price, reducing volatility in Nexen’s earnings.

Nexen Vice President Pierre Alvarez confirmed the sale in an e-mail today. The trading assets will be sold to J. Aron & Co., the commodity-trading division of Goldman Sachs, Alvarez said. Michael Duvally, a spokesman for New York-based Goldman Sachs, confirmed the sale and refused further comment.

The sale is expected to be cash-neutral, Nexen said in an April 30 filing, and the Calgary-based company said it would likely report a $250 million to $290 million non-cash loss associated with the sale. The company said in the filing its marketing business has generated about $800 million in cash during the last 10 years.

“They probably had contracts that were loss positions that these guys had to take, so as a result it was cash-neutral,” said Kristopher Zack, an analyst with Raymond James Ltd. in Calgary.

While the sale won’t boost Nexen’s cash flow, it will likely remove volatility from the oil exploration and production company’s results, Zack said.

Nexen sold its European gas and power-marketing business earlier this year. The company was formed by Occidental Petroleum Corp. when it combined its Canadian units in the early 1970s.

To contact the reporter on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net