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Nexen profit falls, still expects CNOOC deal by year-end
(Reuters) - Canadian oil and gas producer Nexen Inc said it still expects a $15.1 billion takeover bid by China's CNOOC Ltd to close in the current quarter.
Nexen, which reported a 71 percent fall in third-quarter profit on Thursday, struck a takeover deal with CNOOC in July but the politically sensitive deal remains in limbo as the Canadian government determines whether it is of "net benefit" to the country.
CNOOC's chief financial officer, Zhong Hua, told reporters on Wednesday that his company expected to get approval for the takeover by the end of the year.
Ottawa has promised to release a set of clear guidelines for large foreign investments when it announces its decision on the CNOOC takeover bid around November 11.
Doubts about the fate of the CNOOC bid increased last week when Canada blocked a $5.2 billion bid by Malaysian state oil company Petronas for Progress Energy Resources Corp.
Nexen's shares have traded well below CNOOC's bid price of $27.50 since the deal was announced, reflecting concerns that Ottawa may block the deal, which has raised concerns about investments in Canadian resource projects by companies linked to foreign governments.
The stock closed at C$23.63 in Toronto and $23.76 in New York on Wednesday.
"We continue to expect the arrangement to close in the fourth quarter of 2012," Nexen said in its earnings statement.
Nexen said its net income fell to C$59 million ($59.5 million), or 11 Canadian cents per share, in the quarter, from C$200 million, or 32 Canadian cents per share, a year earlier.
LOWER OUTPUT, HIGHER COSTS
The company said lower production volumes and higher operating costs due in part to planned maintenance work at Long Lake oil sands development in Alberta and Buzzard offshore oil venture in the North Sea had hurt results in the quarter.
Nexen, the operator of Buzzard, the biggest UK oil field, said it was in the process of restarting Buzzard, which has been shut since early September, and that it expected production to ramp up in the next week to 10 days.
The company said net sales in the quarter rose about 7 percent to C$1.5 billion.
Production before royalties fell 3 percent to 181,000 barrels of oil equivalent per day (boe/d).
Cash flow, a glimpse into the company's ability to fund development, rose to C$560 million, or C$1.06 per share, from C$516 million, or 98 Canadian cents per share, a year earlier.
Nexen said it was on track to meet its annual production forecast of 185,000 to 220,000 boe/d. (1 = 0.9917 Canadian dollars)
(Reporting By Vrinda Manocha and Bhaswati Mukhopadhyay in Bangalore; Editing by Ted Kerr)
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