CNOOC NEXEN
Executive Summary
As the economy recovers, the Canadian government looks to attract more foreign investors and augment Canada’s energy exportation to Asian countries, especially China. Both of those goals are realized through the acquisition of Nexen by CNOOC. As a company that has been experiencing financial difficulties, Nexen was more than willing to accept the US$15.1 billion all cash bid or US$27.5 per common share outstanding, a 61% premium on its share price as of July 20th 2012, by one of China’s biggest oil companies, CNOOC. The friendly takeover was contingent on the conditions that CNOOC will retain the current management team and employees of Nexen, and establish its North American headquarters in Calgary, AB. After the transaction was completed on February 25th 2013, the acquisition has taken a toll on CNOOC’s revenues as the expected 30% increase in resource reserves and 20% growth in production from synergies have not been achieved, mainly due to difficulties in the integration of the business efficiency model as CNOOC was not allowed to alter the target’s manpower post-acquisition. However, CNOOC remains positive on the transaction as it is compatible with its global, value-driven acquisition strategy, and as its P/E ratio rose from 8.4 to 9.4 after the acquisition.
Pre-acquisition
CNOOC is a state-owned major producer in the Chinese petroleum industry that mainly operates in Bohai, the South China Sea and the East China Sea. The company also has operations in Oceania, Africa and North America. Its main operations are offshore oil and natural gas explorations and development, and has an average daily production of 909,000 boe (barrel of oil equivalent). Over the years, CNOOC has experienced exponential growth in both market share and stock price as it continuous undertaking of new projects in Asia and Oceania. In 2012, the company had a yearly profit of 63,691 million RMB, equivalent to 11,409 million CAD. CNOOC’s growth prospect and ability
As the economy recovers, the Canadian government looks to attract more foreign investors and augment Canada’s energy exportation to Asian countries, especially China. Both of those goals are realized through the acquisition of Nexen by CNOOC. As a company that has been experiencing financial difficulties, Nexen was more than willing to accept the US$15.1 billion all cash bid or US$27.5 per common share outstanding, a 61% premium on its share price as of July 20th 2012, by one of China’s biggest oil companies, CNOOC. The friendly takeover was contingent on the conditions that CNOOC will retain the current management team and employees of Nexen, and establish its North American headquarters in Calgary, AB. After the transaction was completed on February 25th 2013, the acquisition has taken a toll on CNOOC’s revenues as the expected 30% increase in resource reserves and 20% growth in production from synergies have not been achieved, mainly due to difficulties in the integration of the business efficiency model as CNOOC was not allowed to alter the target’s manpower post-acquisition. However, CNOOC remains positive on the transaction as it is compatible with its global, value-driven acquisition strategy, and as its P/E ratio rose from 8.4 to 9.4 after the acquisition.
Pre-acquisition
CNOOC is a state-owned major producer in the Chinese petroleum industry that mainly operates in Bohai, the South China Sea and the East China Sea. The company also has operations in Oceania, Africa and North America. Its main operations are offshore oil and natural gas explorations and development, and has an average daily production of 909,000 boe (barrel of oil equivalent). Over the years, CNOOC has experienced exponential growth in both market share and stock price as it continuous undertaking of new projects in Asia and Oceania. In 2012, the company had a yearly profit of 63,691 million RMB, equivalent to 11,409 million CAD. CNOOC’s growth prospect and ability