CNOOC buys Canada's OPTI
By Richard Fu |
July 21, 2011, Thursday
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Print Edition
Print Edition
CNOOC Ltd, China's dominant offshore oil producer, agreed to acquire struggling Canadian oil sands producer OPTI for US$2.1 billion as it seeks to boost its unconventional energy resources abroad.
CNOOC yesterday said it will pay US$34 million for all OPTI's shares and assume US$2.04 billion of debt, adding the transaction will be funded by internal resources.
OPTI's main asset includes a 35 percent stake in the Long Lake project and three other projects in the Athabasca region of Alberta. Canada's Nexen Inc holds the remaining 65 percent of the Long Lake oil sands project and is the sole operator.
CNOOC is attracted by Nexen's experience in oil sands production and Canada's rich resources, Chief Financial Officer Zhong Hua said. Canada claims it holds 175 billion barrels of recoverable oil in Alberta in the form of oil sands, making it second only to Saudi Arabia in terms of proved crude oil reserves.
"The company will monitor trends in global energy markets and continue to look at and select projects," Zhong said during a conference call from Beijing yesterday. "As the company currently has relatively ample cash, we will consider any projects that fit our strategy."
"While CNOOC acquired their first oil sands property in 2005 with MEG Energy, this (OPTI deal) significantly deepens their interest in this sector," said Sanford C. Bernstein analyst Neil Beveridge, adding that the acquisition price is favorable compared with recent transactions.
OPTI, which last week filed for bankruptcy protection after running out of cash, holds 195 million barrels of proven reserves. The acquisition will boost CNOOC's proven reserves by 5.3 percent and production by 1 percent, Zhong said.
But CNOOC's shares fell 3.2 percent yesterday in Hong Kong after Nomura downgraded the stock to "neutral" from "buy." Nomura said CNOOC's previous 2011 output target of 355 million to 365 million barrels of oil equivalent may be overly optimistic, citing production interruption and delays in completing an acquisition in Argentina.
CNOOC said the OPTI deal, subject to regulatory approval in Canada and China, may be completed in the fourth quarter.
China Petrochemical Corp and CNOOC are among companies that have invested more than US$200 billion in ventures in Alberta to tap the largest oil deposits outside the Middle East.
CNOOC yesterday said it will pay US$34 million for all OPTI's shares and assume US$2.04 billion of debt, adding the transaction will be funded by internal resources.
OPTI's main asset includes a 35 percent stake in the Long Lake project and three other projects in the Athabasca region of Alberta. Canada's Nexen Inc holds the remaining 65 percent of the Long Lake oil sands project and is the sole operator.
CNOOC is attracted by Nexen's experience in oil sands production and Canada's rich resources, Chief Financial Officer Zhong Hua said. Canada claims it holds 175 billion barrels of recoverable oil in Alberta in the form of oil sands, making it second only to Saudi Arabia in terms of proved crude oil reserves.
"The company will monitor trends in global energy markets and continue to look at and select projects," Zhong said during a conference call from Beijing yesterday. "As the company currently has relatively ample cash, we will consider any projects that fit our strategy."
"While CNOOC acquired their first oil sands property in 2005 with MEG Energy, this (OPTI deal) significantly deepens their interest in this sector," said Sanford C. Bernstein analyst Neil Beveridge, adding that the acquisition price is favorable compared with recent transactions.
OPTI, which last week filed for bankruptcy protection after running out of cash, holds 195 million barrels of proven reserves. The acquisition will boost CNOOC's proven reserves by 5.3 percent and production by 1 percent, Zhong said.
But CNOOC's shares fell 3.2 percent yesterday in Hong Kong after Nomura downgraded the stock to "neutral" from "buy." Nomura said CNOOC's previous 2011 output target of 355 million to 365 million barrels of oil equivalent may be overly optimistic, citing production interruption and delays in completing an acquisition in Argentina.
CNOOC said the OPTI deal, subject to regulatory approval in Canada and China, may be completed in the fourth quarter.
China Petrochemical Corp and CNOOC are among companies that have invested more than US$200 billion in ventures in Alberta to tap the largest oil deposits outside the Middle East.
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