OTTAWA Shares of Nexen Inc and Progress Energy Resources Corp tumbled after the Canadian government scheduled a media briefing on Friday amid expectations that it would announce decisions on high-profile bids by China's CNOOC Ltd and Malaysia's Petronas to buy the energy producers.
The rulings would follow months of debate over how much of Canada's energy sector should be controlled foreign oil companies. Investors have watched closely developments. The government is also expected to release broad new guidelines on acquisitions of Canadian companies by state-owned enterprises,
CNOOC has offered $15.1 billion to buy Nexen, which has Alberta oil sands assets and offshore operations in the North Sea, Gulf of Mexico and Nigeria.
Petronas has bid C$5.2 billion for Progress, and the two are planning a West Coast LNG export project that could cost C$11 billion. The government already rejected the Progress deal once, and the bid was subsequently resubmitted.
Canada's Industry Ministry said it would hold a media briefing at 4 p.m. (2100 GMT) on Friday with information embargoed until 5 p.m., and Prime Minister Stephen Harper will make a statement at 5:15 p.m, the government said.
Industry Canada did not reveal the topic for the announcement.
Shares of Nexen Inc were down $1.67, or 7 percent, at $23.50 on the New York Stock Exchange, well under CNOOC's $27.50 bid price. The shares, which had been down as much as 16 percent, were briefly halted in Toronto after news of the announcement.
Progress sank 87 Canadian cents, or 4 percent, to C$19.38 in Toronto, after first falling about 8 percent. Petronas has bid C$22 for Progress, the Calgary-based natural gas producer.
Some investors and analysts said the negative reaction was likely the result of speculation that bad news from Ottawa tends to come on Fridays.
"The announcement came out ... shares started to fall," said John Goldsmith, deputy head of equities at Montrusco Bolton. "The last time Canada issued a decision it was pretty negative and you have a weekend. People don't want to be long the uncertainty over a weekend, so it's just shoot first and ask questions later."
The deals have forced the Harper's Conservative government to examine how much of the country's resources should be sold off to foreigners as billions of dollars are needed to develop the Alberta tar sands and Western Canadian shale gas supplies.
Harper has spent months wooing investment from China and other Asian countries.
CNOOC's takeover of Nexen was overwhelmingly approved by Nexen shareholders in September, but the government delayed approvals while it drafted a long-promised update to the rules governing investments by state-owned foreign companies.
It also had to deal with the qualms of some of its own members over whether companies from the communist country should be allowed to buy up Canadian energy assets.
Meanwhile, a high-level foreign investment committee in Washington is also vetting the deal because of Nexen's U.S. Gulf assets.
Petronas announced its bid in June, but was forced to raise it the next month when an unnamed rival bidder approached the Canadian company's board.
Then in October, though there was little opposition to the deal, Industry Minister Christian Paradis blocked it when Petronas declined the government's last-minute request to extend the deadline for a decision, forcing it to re-open talks. ($1=$0.99 Canadian)