Novus Energy Inc. (NVS), the Canadian oil producer being purchased by Yanchang Petroleum International Ltd. (346), plans to grow “aggressively” through acquisition, the company’s chief executive officer said.
There are the equivalent of about 300,000 barrels of oil a day for sale in Canada outside the oil sands, both through public processes and privately, Hugh Ross, who heads Novus in Calgary, said in a phone interview today. Asset prices are falling as producers with properties for sale can’t raise capital on equity markets, he said.
Yanchang Petroleum International, a unit of Chinese state-owned Shannxi Yanchang Petroleum Group Co., the nation’s fourth-largest producer, agreed to buy Novus for C$1.18 a share, or C$232 million ($221 million), China’s biggest purchase of a Canadian oil and natural gas company since Cnooc Ltd. (883)’s takeover of Nexen Inc.
“It is a great time to be an acquisitor in the kind of market we’re in,” Ross said, specifying that he’s looking for light oil in Western Canada. “In the future, we plan on obviously being an acquisitor.”
Ross said he agreed to remain CEO of Novus for a period of time he wouldn’t disclose. The deal isn’t large enough to require federal government approval under Canada’s foreign-takeover law and is expected to close in December, at which point Novus will outline specifics about its growth plans in Canada, Ross said.
Canadian Prime Minister Stephen Harper outlined changes to the nation’s foreign-investment rules when he approved Cnooc’s Nexen purchase in December, prohibiting state-controlled companies from acquiring oil-sands businesses barring what he called “exceptional circumstances.”
Novus rose to C$1.07 at 2 p.m. in Toronto today, 29 percent higher than the closing price on Aug. 27. Trading was halted on Aug. 28 until today by market regulators at the request of the company pending news, according to a statement by the Investment Industry Regulatory Organization of Canada.
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