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:
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conventional oil and gas assets in the North Sea, the Gulf of Mexico, and offshore West Africa;
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oil sands investments and assets in Alberta, Canada; and,
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less consequential assets in Columbia and Poland.
Aside from the obvious, my comments are:
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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;
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it is unlikely to be a transaction the Canadian government will interfere with;
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it reinforces questions related to the Keystone pipeline and its turndown by U.S. President Obama earlier this year;
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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;
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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,
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a 61% 'premium to market' is 'large by convention', and causes one to wonder whether there were or are other potential bidders'
Topical References: CNOOC's Nexen bid an indication of how far goal posts have moved, from The Globe and Mail, Jeff Rubin, July 24, 2012 - reading time 3 minutes; and As China costs rise, technology lures factories home, from Reuters, Scott Malone and Ernest Scheyder, July 24, 2012 - reading time 3 minutes.
