Nexen, Progress jump on report takeover policy imminent

OTTAWA Thu Nov 15, 2012 7:50pm EST

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OTTAWA (Reuters) - Nexen Inc's NXY.TO shares jumped nearly 3 percent on Thursday after a report suggested Ottawa might speed up its decision on whether to allow a $15.1 billion takeover of the Canadian oil producer by China's state-owned CNOOC Ltd (0883.HK).

The Canadian government is reviewing the proposed takeover, along with a bid by Malaysian state oil company Petronas PETR.UL for Progress Energy Resources Corp PRQ.TO to see if they pass its test of being of net benefit to Canada. It has promised to issue a new policy framework on foreign investment at the same time as it announces its decisions on the deals.

Progress stock also jumped about 3 percent on Thursday in an overall down market.

Canada's consul general in New York, John Prato, was cited by the online news service dealReporter as suggesting the new foreign investment guidelines could come this week or next week.

The news organization, which is part of the Financial Times Group, said Prato later told its reporter the government has said it would issue the guidelines in November.

The news article contained no direct quotes and Prato's office was not immediately available to confirm his remarks. A spokesman for Canadian Prime Minister Stephen Harper said: "I won't speculate on timing."

The comments were likely behind the gains in the shares of Nexen and Progress, National Bank Financial analyst Kyle Preston said.

"(The stock reaction is positive) the more we hear about the potential for the government to make a decision sooner rather than later," Preston said. "They are pretty loose indications, but the government continues to reiterate they are supportive of foreign investment."

Harper said in a press conference in Ottawa on October 22 that the announcements would come in the "not-too-distant" future.

Canada said earlier this month it was extending the review of the CNOOC bid by 30 days to December 10 and most observers expected it to make an announcement at the end of that period.

Nexen shares have hovered below CNOOC's $27.50 a share bid price since the deal was announced in July, largely on investor concern that Ottawa might block the deal or demand conditions that the Chinese state-owned suitor finds too onerous.

The stock jumped 66 cents to $25.18 on the New York Stock Exchange on Thursday. The Toronto-listed shares closed up 71 Canadian cents at C$25.26.

Progress ended up 59 Canadian cents at C$19.98.

(Reporting by Louise Egan and Jeffrey Jones; Editing by Peter Galloway)

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