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CNOOC Executive Director, President and Chief Executive Li Fanrong attends a news conference on its 2012 strategy preview in Hong Kong in this January 18, 2012, file photo.

Bobby Yip/Reuters

A $320-million takeover of a Canadian oil company by a Chinese one would have barely registered a year or two ago, when ever-larger Calgary-based producers were getting picked off left and right.

Now, Yanchang Petroleum Group's friendly acquisition of Novus Energy Ltd., a junior energy concern, has the oil patch buzzing. The biggest reason: It's the first Canadian energy acquisition by a state-owned Chinese company since last year when CNOOC Ltd. bid $15.1-billion (U.S.) for Nexen Inc.

Hugh Ross, Novus's chief executive, said the takeover is just the start of a Canadian buying spree for Yanchang's international division, which is starting small and keeping his management team in place to guide the operation.

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"We're going to aggressively grow Novus through a series of acquisitions and through aggressive drilling programs," Mr. Ross said.

Yanchang was not put off by tightened scrutiny on takeovers by state-owned enterprises that followed the Nexen deal, he said.

That transaction prompted Prime Minister Stephen Harper's Conservatives to agonize over how much of the country's resources should be auctioned off to entities run by foreign governments.

The results, following months of deliberation, were new rules effectively barring state-owned enterprises from snapping up any more controlling stakes in the oil sands. Ottawa didn't target other resources, but its increased scrutiny after wooing Chinese and other Asian investment contributed to a chill in deals across the board, industry players contend.

China's absence is at least partly behind merger and acquisition activity in the sector being squelched. In the first half, the value of M&A was $4.4-billion, less than one-quarter of the amount in the same period in 2012, according to Sayer Energy Advisors. An even bigger reason is a drop-off in billion-dollar deals by anyone, Sayer vice-president Tom Pavic said.

There have been more than a few that fit both both criteria. In 2011, CNOOC bailed out struggling OPTI Canada in a $2.1-billion (U.S.) deal that was mostly assumption of debt. Sinopec Corp. acquired Daylight Energy for nearly $3-billion. Last year, Sinopec bought half of Talisman Energy Inc.'s U.K. North Sea assets for $1.5-billion (U.S.).

For Yanchang, the Novus deal is its entry to Canada, and given its size it's more of a ripple than a splash. Last year, it generated revenue of $25-billion (U.S.) from its oil production and refining operations. TSX Venture Exchange-listed Novus had revenue of $76-million, derived from its southwestern Saskatchewan light oil properties.

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The move is clearly a beachhead from which to expand, said Luc Mageau, analyst at Raymond James. Novus's main assets are in a region of Saskatchewan known as Dodsland, where it produces oil using horizontal drilling and hydraulic fracturing methods in a geological formation called the Viking.

Novus had been examining strategic options since December, having hired Cormark Securities Inc. and FirstEnergy Capital Corp. as advisers. Yanchang's bid price of $1.18 per share in cash compares with a $1.10 price on the day before Novus started that process.

"You're looking at a 4,000 barrel a day producer versus Nexen, which was substantially larger than that," Mr. Mageau said. "I've got to think that this is maybe the first a few to come for these guys."

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