Investors on the Toronto Stock Exchange have greeted CNOOC Ltd., the Chinese energy giant that bought Nexen Inc., with a shrug, making just over a dozen trades on its first day on the Canadian market.
CNOOC pledged to list its shares on the TSX to help solidify Ottawa’s support to buy the Calgary-based oil and gas producer. The $15.3-billion takeover was approved in late 2012 and the deal was completed this winter. CNOOC listed the company’s American depository receipts (ADRs) on the TSX Wednesday.
Traders, however, barely noticed.
Investors executed 17 trades Wednesday, for a total volume of 904 units. The units closed at $215 each after opening at $213.46. One CNOOC ADR is equivalent to 100 common shares of CNOOC. The parent company’s ADRs also trade on the New York Stock Exchange, while its common shares are listed on the Hong Kong Stock Exchange.
The Conservative government has moved to assuage concern over foreign ownership of Canadian assets by requiring a high degree of transparency from large corporate buyers of local firms. Disclosure requirements for listed companies help to ensure Canadian transparency standards are met. CNOOC promised to list shares on the TSX when it made its first takeover proposal last summer.
CNOOC expects to spend about $3-billion in 2013 on projects under the Nexen banner. CNOOC executives, however, would not break out how much of that budget has been directed toward oil sands operations.
Executives at the Beijing-based, state-owned company would not reveal spending plans for Nexen in 2014, saying only that a glimpse of CNOOC’s plans for its Canadian branch will be provided in upcoming reports. The executives spoke Wednesday after CNOOC started trading in Toronto.
CNOOC has controlled Nexen, which has assets around the world, since February. Nexen’s primary assets are its oil sands properties, though Li Fanrong, CNOOC’s CEO, said is not considering selling other slices of the energy outfit.
“The short answer is no,” Mr. Li said in an interview. “I think right now, everything is meeting our expectations. We are, right now, in the process of a discussion on how to maximize our investment.”
In order to obtain approval to buy Nexen, CNOOC had to prove the deal would be a “net benefit” for Canada. After negotiating with the government, the Chinese company passed this test last December.
The Conservative government, however, stiffened the rules around foreign takeovers in the wake of its approval of CNOOC’s Nexen purchase, essentially making it impossible for a state-controlled company to own all of an oil sands project.
Canada’s Natural Resources Minister Joe Oliver said CNOOC is living up to its promises to the Canadian government, such as disclosure and job preservation.
“I believe they are,” he said at conference in Calgary. “And of course from the Chinese perspective, they always take the long-term view. They have a real interest in Canada, both as a source of commodities, which they need and will need more of in the future, and as a place where there are interesting investment opportunities.”
With files from Jeffrey Jones and Boyd Erman