TEXT - S&P says Nexen ratings unaffected by Canadian govt's bid approval

Mon Dec 10, 2012 10:57am EST

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Dec 10 - Standard & Poor's Ratings Services today said that its ratings on Nexen Inc. are unaffected for now by the Canadian government's approval of CNOOC Ltd.'s (AA-/Stable/--; cnAAA/--) bid to acquire the company. The ratings on Nexen remain on CreditWatch with positive implications pending an in-depth assessment of the prospective parent-subsidiary relationship. In resolving the CreditWatch placement, we will focus on the resulting corporate structure, Nexen's strategic importance to CNOOC, and any guarantee or repayment of debt obligations. On July 23, 2012, we placed the ratings on CreditWatch following CNOOC's announcement that it had entered a definitive agreement to acquire all of Nexen's common and preferred shares for C$15.1 billion. The company's C$4.3 billion in debt would remain outstanding.

Calgary, Alta.-based Nexen is an independent exploration and production company with proved reserves of 900 million barrel oil equivalents as of year-end 2011. Its business covers conventional oil and gas, oil sands and shale gas. CNOOC is the core operating subsidiary of China National Offshore Oil Corp. (CNOOC; AA-/Stable/--; cnAAA/--), which is one of three wholly government-owned oil companies in China. Our ratings on CNOOC are based upon its stand-alone credit profile of 'a', enhanced by what we view as an "extremely high" likelihood of support from the Chinese government.

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