Energy producer Nexen Inc. and Chinese energy giant CNOOC Ltd. (CEO - Free Report) have jointly agreed to extend the deadline for the closing of the proposed $15.1 billion deal by 30 days. The group took this decision as it awaits approval from the U.S. government.
Nexen said that the Outside Date was originally Jan 31, 2013. Now, it has been postponed to Mar 2. Although the companies gained approvals from the authorities of Canada, the United Kingdom, the European Union and the People’s Republic of China, the Committee on Foreign Investment in the U.S. is yet to give its green signal.
Notably, owing to this extension, Nexen will also defer its fourth quarter 2012 earnings and annual financial report. The Calgary, Alberta-based oil-sands operator did not specify any date for the release.
The parties involved in the transaction can extend the Outside Date until they obtain all the regulatory approvals. However, such extensions are not expected to exceed 75 business days from Jan 31, in aggregate.
Last December, CNOOC got the nod from the Canadian authorities. This marked the clearing of a major impediment in completing the China's biggest ever $15.1 billion foreign take over.
CNOOC − China’s biggest offshore oil and gas producer − highlighted during the Jul 23 bid that upon the successful completion of the deal, CNOOC will list its shares on the Toronto Stock Exchange. It will also retain Nexen’s existing employees, and establish Calgary as its North and Central American headquarters.
As the world's second-largest economy, China has a huge energy requirement. The Nexen acquisition bid foregrounds not just the bold attempt of CNOOC but also of other Chinese biggies to make deeper inroads into the international energy markets with the specific aim of meeting domestic demand.
Recently, China Petroleum & Chemical Corp. (SNP - Free Report) , aka Sinopec, planned to acquire international upstream oil and gas assets from its parent company, China Petrochemical Corp., or Sinopec Group, in order to spread its footprint globally. In this regard, Sinopec is eyeing assets in countries such as the U.K., Russia, Colombia and Kazakhstan.
The transaction – expected in April this year – would position Sinopec on the same platform with other international energy giants like ExxonMobil Corp. (XOM - Free Report) and Chevron Corp. (CVX - Free Report) .
CNOOC currently retains a Zacks Rank #3 (short-term Hold rating).