CNOOC (Chinese) to Buy Nexen

[Knalus]

Originally Posted by Senator Clay Davis

For whatever reason, I think the Feds will reject this deal. Just a gut feeling. And they should too. Canadian companies coming under the control of foreign governments isn't a good thing.

It goes both ways, though. Foreign governments coming under the influence of Canadian companies?

[Senator Clay Davis]

Just out of curiousity which foreign governmentes are under the influence of Canadian companies?

End of the day there's not really any benefit to Canadians if this happens. There's incredible benefit to the Chinese and to Nexen shareholders, but as a Canadian I couldn't care less about either group.

[red sky]

Originally Posted by Senator Clay Davis

Just out of curiousity which foreign governmentes are under the influence of Canadian companies?

End of the day there's not really any benefit to Canadians if this happens. There's incredible benefit to the Chinese and to Nexen shareholders, but as a Canadian I couldn't care less about either group.

What about royalties, FDI, and future employment?

CNOOC will be able to advance some of Nexen's projects at a much faster pace, especially their NGL development.

[Senator Clay Davis]

Royalties, eh, not really, it might accelerate the process of collecting revenues, but those revenues would get collected eventually anyways, so thats a wash to me.

Foreign investment is fine by me, though its problematic when its foreign government investment and not foreign corporate investment. As has been mentioned a state-run oil company doesn't have the same problems (namely cashflow) that most public companies do.

Employment, well I guess we'll see. As it is most O&G companies can't find enough people for the positions they need, so I'm not sure how much more they can help in creating jobs in a sector that is currently desperate for more employees.

[SeeGeeWhy]

Originally Posted by Regorium

Wait, I don't really understand your point here. Isn't the whole point that Exxon DOESN'T have the resources because of our regulations against monopoly? I mean, I agree with you that if Exxon was as big as CNOOC and left unchecked, they'd be absorbing companies left and right, but the main point is that they can't do that.

The chinese governmental companies, on the other hand, are allowed to do that. This means that they're not playing by the same rules. It's just fact, not "a load of crap".

Finally, while I would argue against monopoly, I would also argue against foreign government companies (monopolies in their own countries) being allowed to take over all of our domestic companies, and their assets/natural resources. I'm not smart enough to reconcile the two and provide a solution, but I hope you see my point. Perhaps if our "way" and our "culture" ends up with us getting swallowed up by foreign companies, we should rethink it before it's too late.

Well, CNOOC, Sinopec and CNPC are all seperate entities that act in competition with one another internationally. The only place they can really get away with "not playing by the same rules" would be anywhere the Chinese government writes the laws. That does not apply in Canada. So really my point is that they are playing by the exact same rules in this arena as any other company that develops these resources. These Canadian investments are only a few out of hundreds of acquisition proposals sourced from around the world that get tabled annually by the BD groups of CNOOC, CNPC and Sinopec. They have to meet financial hurdles like any other investment, the projects have to receive environmental and crown approvals like any other, they have to pay royalties and commit to management teams being made of a certain number of domestic citizens... my point is that they play by the exact same rules as anyone else in our back yard.

The deal that our government makes with these companies is a license to produce in exchange for royalties on the production. They agree that a company is allowed to develop the resource, after careful review and approval of the project, at their own cost in exchange for royalties and promised jobs for our citizens. That's it. If these projects don't go ahead, those leases and licenses expire and the government gets to sell the rights all over again. Those rights get continued if and only if royalties (and any other approval conditions) get met on an ongoing basis.

My point of contention with your statement was saying they aren't playing fair. Why? You would be happier if CNRL or Cenovus bought Nexen out instead? Exxon? Total? Shell? BP? Saudi Aramco? Repsol? Resolve? Petronas? Petrobras? Who cares who it is? All these companies have to abide by our laws no matter where they are "from"... and actually the foreign based firms end up committing to other special conditions that a Canadian based firm would not necessarily have to agree to.

In my opinion, these deals establish Canadian subsidiaries that pay provincial royalties and federal taxes. They create jobs. They end up creating entities that have the resources to develop the mega projects with greater certainty. To us, that IS a big deal. Our oil sands projects have been suffering for a long time for being under funded, under staffed, and who's leases are owned by corporate interests that are obsessed with quarterly reporting metrics. That is insanity, and frankly I think its a big part of "our culture" that could use a massive overhaul. What's wrong if we started looking at our resource as a long term benefit and invested and developed them as such?

The people who complain the most about these deals, and I am not saying you are one of them, also seem to be those who are the least educated on the circumstances.

The US is continually developing the means to supply their energy requirements on a domestic basis by developing resource plays. What that means is that Canada will lose its place as the primary oil supplier as their domestic capacity ramps up. Where does that leave us? We need to be selling to other markets.

Dare I say that a little more cross cultural exchange might even be a good thing for our nation? I might argue that in Western Canada there is a long and rich history of Chinese influence in our culture that exists already. Heck in the oil patch alone you've got Husky Energy... a major player who has been held in majority forever by Hutchinson Whampoa which has its roots in Hong Kong. There's been a "chinese" company in our backyard for decades and no one seemed to care about that. Is that because it was privately held instead of it being a foreign national?

There are a lot of people who are unaware of the degree of foreign interests in "our resource" already. Well, there are very few freehold rights that exist, and the other fact is that these stakes change hands all the time, and right now... we're hot. As a matter of fact, we're one of the hottest places on earth and it has created an absolute haven for our little bubble in the corner of the world. We had better take advantage of it while we can because it won't last forever.

Do people have an issue with the "Non-Canadian" First Nations that own and control mineral rights on reserve lands? That's resource that constantly gets developed under suspect agreements or not at all. In comparison, the Chinese are pretty damn transparent about what they are up to and more than willing to bring the cash and people that are required to the table in order to get these things going. A lot more than can be said about some of the other international majors or First Nation controlled lands...

[SebC]

Originally Posted by Senator Clay Davis

Royalties, eh, not really, it might accelerate the process of collecting revenues, but those revenues would get collected eventually anyways, so thats a wash to me.

Not true. If the world moves away from oil before we sell it, it'll stay in the ground forever. Also getting the money now and having the opportunity to invest it is better than getting the money later.

As for being taken over... Nexen's investors just got a big premium. If those investors are Canadian and re-invest their money, Canada's ownership stake in the world economy just got bigger.

[Senator Clay Davis]

Originally Posted by SebC

Not true. If the world moves away from oil before we sell it, it'll stay in the ground forever. Also getting the money now and having the opportunity to invest it is better than getting the money later.

As for being taken over... Nexen's investors just got a big premium. If those investors are Canadian and re-invest their money, Canada's ownership stake in the world economy just got bigger.

Oil will stop being the fossil feul of choice when we are dangerously close to running out of it. Something tells me oil companies making billions a quarter probably aren't going to abandon that ship until they have to. Oil companies have a huge lobby for a reason.

I do find it curious how this thread is the only place I've seen where most people are for this and not against it. Even the comment section in the Sun is mostly against this.

[kirant]

Originally Posted by Senator Clay Davis

Oil will stop being the fossil feul of choice when we are dangerously close to running out of it. Something tells me oil companies making billions a quarter probably aren't going to abandon that ship until they have to. Oil companies have a huge lobby for a reason.

I do find it curious how this thread is the only place I've seen where most people are for this and not against it. Even the comment section in the Sun is mostly against this.

We're running out of easily accessible oil. There's a great deal of oil left in the world...it's just harder and more expensive to get.

Agreed oil will be phased out after a while (though at the moment, I think we need to get out of the coal phase first...a vast majority of the US household electricity is still coal generated. Oil is mostly a transportation fuel).

[bizaro86]

Originally Posted by SebC

Not true. If the world moves away from oil before we sell it, it'll stay in the ground forever. Also getting the money now and having the opportunity to invest it is better than getting the money later.

As for being taken over... Nexen's investors just got a big premium. If those investors are Canadian and re-invest their money, Canada's ownership stake in the world economy just got bigger.

There's probably some local benefits as Nexen employees cash out options (some should be in the money, maybe not many) and collect (I assume) some sort of retention bonuses. That money gets injected into the local economy here, not in China.

[Senator Clay Davis]

Undoubtably there are bonuses in the executives contracts for a takeover as well. And of course realistically executives will be the ones cashing in the most on this through options and holdings.

[bizaro86]

Originally Posted by Senator Clay Davis

Undoubtably there are bonuses in the executives contracts for a takeover as well. And of course realistically executives will be the ones cashing in the most on this through options and holdings.

Sure, I think it's reasonable to expect the executive will be getting more than the rank and file. I bet both groups of people mostly live in Calgary, and will mostly do extra spending in and around Calgary.

[Knalus]

Originally Posted by bizaro86

Sure, I think it's reasonable to expect the executive will be getting more than the rank and file. I bet both groups of people mostly live in Calgary, and will mostly do extra spending in and around Calgary.

Not only that, but the company will continue to pay salary in Canada to it's new employees, as well as future bonuses. It will continue to pay for future landsales, for it's new offices, for growing it's company all that money will be paid to Canadian workers, pipefitters, surveyers, ect.

Business is not a zero sum game. These guys are going to create significant wealth, the good news is that it is going to be here.

Besides, nothings stopping the executive from Nexen to take their money and use it to create a new company from the ground up. Happens all the time.

[kirant]

Originally Posted by Knalus

Besides, nothings stopping the executive from Nexen to take their money and use it to create a new company from the ground up. Happens all the time.

I honestly expect this will happen. I wouldn't be surpised if they go acquire and attempt to develop some experimental oil and gas assets with their newfound money.

[Senator Clay Davis]

Obviously how much executives net from any deal depends on the conditions in the options. Wouldn't be surprised to see some backdating of options to perhaps create more money.

[Azure]

I say the Feds approve it simply because the Harper Government has indicated that they will be more friendly to the Chinese in terms of our oil/NG development, and shipping more product there.

[red sky]

How about the plethora of call options purchased last week. Great timing... man is the market ever corrupt.

[Senator Clay Davis]

^Now I really don't want this deal go through so those people get stiffed. Insider trading at its finest right there.

Edit: Although I wish I would have known too damnit...

[bizaro86]

Originally Posted by Senator Clay Davis

^Now I really don't want this deal go through so those people get stiffed. Insider trading at its finest right there.

I'd prefer for the deal to go through and those who are corrupt to be made an example of via giving up their ill gotten gains along with criminal convictions and prison time.

[Knalus]

Originally Posted by Senator Clay Davis

^Now I really don't want this deal go through so those people get stiffed. Insider trading at its finest right there.

Edit: Although I wish I would have known too damnit...

Now, I know it looks like insider trading... but who is getting stiffed? The public?

How about the company that will pay out all those options, CNOOC?

I think they are the ones that would have to pay those people for the options that they just called, no? I mean, if all the shares are going to be purchased by a foreign multi-national, they will be the ones picking up the tab.

[trumpethead]

Originally Posted by Azure

I say the Feds approve it simply because the Harper Government has indicated that they will be more friendly to the Chinese in terms of our oil/NG development, and shipping more product there.

I say the govt approves - simply to show the Americans that while they plod along with Keystone XL approval, we are ready to do business with other global partners. It is deals like these, with partners like these, that create the "are you in? or are you out?" analysis for the US. As a result, this deal may finally get the US "off the pot" with respect to securing an agreement for Keystone and other mega-projects.