PrefBlog

Standard & Poor’s has announced:

• CNOOC Ltd. (AA-/Stable/–; cnAAA/–) has agreed to acquire Nexen Inc. in a transaction valued at about C$19.4 billion, including assumption of
  debt.

• We are placing our ratings, including our ‘BBB-‘ long-term corporate credit rating, on Nexen on CreditWatch with positive implications.
• The CreditWatch placement reflects the potential that we might raise our ratings on the company to match CNOOC’s stand-alone credit profile of ‘a’ upon the transaction’s completion.
• We expect to resolve the CreditWatch placement before the end of 2012.

S&P also announced:

that the rating on China-based CNOOC Ltd. (AA-/Stable/–; cnAAA) is not immediately affected by the company’s proposed acquisition of Nexen Inc. (BBB-/Watch Pos/–). In our view, the US$15.1-billion acquisition is larger than previous CNOOC deals in recent years and could test the company’s integration ability.

Standard & Poor’s sees the acquisition as consistent with CNOOC Ltd.’s strategy to expand outside China. The transaction, once completed, would increase CNOOC Ltd.’s proven reserves by about 30% and production by about 20%. More importantly, it provides a good opportunity for CNOOC Ltd. to diversify its operations materially in the low-risk member countries of the Organization for Economic Cooperation and Development (OECD). At the end of 2011, more than 71% of CNOOC Ltd.’s reserves are off the coast of China, and over 20% of reserves are in countries with high sovereign risks. After the acquisition, CNOOC Ltd.’s reserves in China will fall to 56% and its reserves in OECD countries would increase to above 28%.

NXY has issued a single preferred share issue, NXY.PR.A, which is tracked by HIMIPref™.

This entry was posted on Tuesday, July 24th, 2012 at 11:33 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.