DBRS Comments on Closing of Nexen Inc. Acquisition by CNOOC

DBRS today notes the closing of the previously announced acquisition of Nexen Inc. (Nexen or the Company; rated BBB, Under Review-Positive) by the China National Offshore Oil Company Limited (CNOOC) for $19.4 billion, which includes $15.1 billion in cash and $4.3 billion in assumed debt.

At the time of the initial announcement (please see DBRS press release dated July 23, 2012), DBRS placed the ratings of Nexen Under Review with Positive Implications, reflecting the change in ownership should the transaction proceed as proposed. CNOOC’s credit quality is significantly stronger than Nexen’s, reflecting its: (1) size and scale of operations, (2) strong financial profile, with low debt levels and strong liquidity, and (3) 64% indirect ownership by the government of the People’s Republic of China, which could provide support if required.

DBRS continues to view the transaction as a credit positive for Nexen, and will continue to review the transaction in the coming weeks for credit implications.

CNOOC is China’s largest producer of offshore crude oil and natural gas, and one of the largest independent oil and gas exploration and production companies in the world, with market capitalization of approximately $90 billion, assets of $61 billion, and production of 900,000 barrels of oil equivalent (boe) per day. Operations are focused primarily in the South China Sea region.

Nexen Inc. is now a wholly-owned subsidiary of CNOOC Limited. Nexen is focused on three growth strategies: oil sands and shale gas in western Canada and conventional exploration and development primarily in the North Sea, offshore West Africa and deepwater Gulf of Mexico.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Oil and Gas Companies, which can be found on the DBRS website under Methodologies.