Industry Canada to Make Announcement Ahead of Nexen
Canada’s Industry Department will make an “important” announcement at 5 p.m. Ottawa time as the deadline approaches for a decision on Cnooc Ltd. (883)’s bid for Nexen Inc. (NXY) Nexen had its biggest decline in 15 months.
According to an advisory posted on the Government of Canada news center website, media will be invited to a briefing lock-up at about 4 p.m. in Ottawa. Industry Canada is responsible for foreign investment reviews.
Canadian Prime Minister Stephen Harper has set a deadline of Dec. 10 to review the $15.1 billion bid by China’s Cnooc for Nexen of Calgary, in what would be the largest foreign takeover by a Chinese company. Canada is also reviewing a C$5.2 billion ($5.2 billion) bid by Petroliam Nasional Bhd of Malaysia for Progress Energy Resources Corp. (PRQ) Harper will speak to reporters at 5:15 p.m.
The deals must show a “net benefit” to Canada, holder of the world’s third-largest oil reserves. Canada’s rejection of BHP Billiton Ltd. (BHP)’s bid for the nation’s biggest potash producer and an adverse ruling on Petronas’s offer in October led investors to mark down the chances of them succeeding.
Nexen plunged 6.4 percent to C$23.29 in 4 p.m. trading in Toronto, after earlier declining as much as 16 percent. The drop was the biggest since Aug. 8 2011. Cnooc bid $27.50 a share for Nexen. Progress fell 4.9 percent to C$19.26, short of the C$22 bid from Petronas.
Harper has said his government will release a new “policy framework” on foreign investment around the time of the Nexen decision.
Asian companies are seeking assets in North America after the continent last year reported the world’s biggest increase in oil and gas production after the Middle East. A surge in gas produced by cracking open shale rocks in the U.S. made it the world’s biggest producer of the fuel in 2009. Canada requires almost C$650 billion of investments over the next decade to develop its biggest resource projects.
Many Canadians are uneasy about deals such as Cnooc’s. Fifty-eight percent of Canadians believe the Nexen bid should be blocked, an online Angus Reid Public Opinion survey of 1,000 people conducted from Oct. 10 to Oct. 11 showed. The New Democratic Party, Harper’s main rival in Parliament, has opposed the bid.
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com
To contact the editor responsible for this story: David Scanlan at firstname.lastname@example.org