* Wants Canadian boss to "get the operation right"
* Commitments include maintaining staff levels
* No decision yet on shale gas and LNG plans
By Jeffrey Jones
CALGARY, Alberta, Feb 27 Chinese oil company
CNOOC Ltd, its takeover of Canada's Nexen Inc
now complete, is giving the leader of the Canadian unit freedom
to get operations running smoothly after an exhaustive
seven-month acquisition process, CNOOC's CEO said on Wednesday.
The deal, which boosts CNOOC's global oil and gas production
by 20 percent and reserves by 30 percent, closed on Monday after
clearing the final hurdle, sign-off by U.S. regulators.
"This is a big deal. Nexen is a big organization. We'll
fully empower the management team here to get the operation
right, to prioritize the strategy for the future," Li Fanrong,
chief executive of CNOOC, told reporters at Nexen's Calgary head
CNOOC and Nexen executives refused to give details of what
they had to do to satisfy the Committee on Foreign Investment in
the United States following its extended review. The deal needed
U.S. approval because of Nexen's Gulf of Mexico operations.
Kevin Reinhart, who was interim CEO of Nexen for the past
year, is now heading up CNOOC's North and Central American
operations, which adds about $8 billion of assets to Nexen's
holdings. The transaction was China's biggest foreign takeover.
CNOOC will not initially look to add to Nexen's assets
through further acquisitions, Li said.
With the contentious deal done, CNOOC gets control of
Canadian oil sands and shale gas assets as well as exploration
and production holdings in the Gulf of Mexico, North Sea and
offshore West Africa.
It also takes on 3,000 employees, including 1,700 in Canada.
As part of its undertakings to satisfy the Canadian government
that the deal would have a net benefit to the country, it has
pledged to keep all the staff.
Li and Reinhart hosted a town hall meeting for the employees
on Wednesday, partly to calm nerves. They told the staff it will
be business as usual, despite the months of uncertainty.
Reinhart said there had been little staff turnover since the
announcement, which shook up Canada's oil patch and raised fears
about foreign control over the oil sands. However, he said some
incentive programs had been tied to the deal being closed, so it
is not clear how many could still cash out and leave.
"It's possible that we're going to see some people make some
of those decisions. That comes out of every transaction," he
said. "But the whole intent is to go in with compensation
programs that make it attractive for people to stay here ... you
don't want them to go over to another job where they're going to
be financially better off."
Ottawa approved the deal in December, saying that it would
not be detrimental to the Canadian economy after CNOOC made
commitments on employment, spending and other areas. In its
wake, however, Prime Minister Stephen Harper essentially closed
the door on future majority acquisitions of Canadian oil sands
assets by foreign state-owned enterprises.
CNOOC's undertakings for Ottawa will only go so far as being
beneficial to the company and economy, Reinhart said.
"CNOOC wasn't prepared to make uncommercial commitments and
the government wasn't asking for uncommercial commitments," he
said. "A lot of time was spent so that we could explain our
business in sufficient detail so they understood what would be
commercial and what wouldn't be commercial.
"Taken to an extreme example, producing product at below its
fair value is not in the best interests of Canadians."
For future investments in Canada, the executive said they
were still evaluating how best to develop Nexen's extensive
northeastern British Columbia shale gas assets.
Nexen and its partners, a group led by Japan's Inpex Corp
, have discussed the possibility of joining the rush to
build liquefied natural gas plants on Canada's West Coast to
help boost the value of the gas from the Horn River and Liard
regions. There is no deadline for a decision.
Another commitment is a listing of CNOOC shares on the
Toronto Stock Exchange. Executives said they will now go through
the approval process with Canadian regulators and do not yet
have a timing for the listing.
Nexen shares are due to be delisted shortly. They closed at
C$28.18 in Toronto on Wednesday.