ANP Says China's CNOOC Pulls Out of Brazil Oil-Concession Auction

Chinese integrated oil company CNOOC Ltd. pulled out of an auction of oil and natural gas exploration concessions in Brazil, the country's National Petroleum Agency, or ANP, said Tuesday.

ANP officials gave no reason for the company's withdrawal. CNOOC officials were not immediately available to comment. The ANP had approved 64 companies for the auction, the country's first since 2008.

The ANP is offering 289 oil and natural gas exploration blocks for sale at the auction.

The fresh round of bidding is expected to generate a surge in activity across Brazil's oil industry, which was running out of areas to explore in the absence of concession auctions. Oil companies had warned that exploration could dry up as soon as 2015 without new sales of exploration acreage.

The auction is the first of several sales of exploration acreage set to take place in Brazil this year, including the first sale of subsalt exploration acreage under new production-sharing agreements.

Billions of barrels of oil have been discovered in the subsalt region, where oil and natural gas were found trapped deep beneath the ocean floor under a thick layer of salt. Unconventional oil and natural gas concessions, the same type of shale and tight gas acreage that sparked an oil-industry revolution in the U.S., are also expected to be sold this year.

Many of the world's largest oil companies from 18 different countries have been cleared to participate in the auction, including Exxon Mobil Corp., Chevron Corp. and BP. Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, entrepreneur Eike Batista's OGX Petroleo e Gas Participacoes and startup HRT Participacoes em Petroleo also have been approved.

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CNOOC Starts Up Production at Wei Zhou

CNOOC Limited announced Monday that Wei Zhou 6-12 oil field has recently commenced production.

Weizhou 6-12 oil field is located in Beibu Gulf Basin in the north part of the South China Sea with an average water depth of about 95.8 feet (29.2 meters). The project has 10 producing wells and is expected to hit its peak production in 2013.

The Company holds 51 percent interest and acts as the Operator of Weizhou 6-12 oil field. The partners of this oil field are Roc Oil (China) Company, Horizon Oil (Beibu) Ltd (including Petsec Petroleum LLC) and Oil Australia Pty Ltd.

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CNOOC 2012 Net Profit Falls 9.3%; Slightly Below Analysts' View

HONG KONG - CNOOC Ltd., which completed its acquisition of Canada's Nexen Inc. last month, Friday posted a 9.3% fall in 2012 net profit, a decline that was largely anticipated because of rising operating costs and higher resources tax expenses.

CNOOC, China's largest publicly traded offshore oil-and-gas producer by capacity, posted a net profit of 63.69 billion yuan (US $10.3 billion) in 2012, down from CNY70.26 billion the previous year. The figure was slightly below the average CNY64.86 billion net profit forecast of 32 analysts polled earlier by Thomson Reuters.

Revenue rose 2.8% to CNY247.63 billion from CNY240.94 billion on higher oil and gas sales.

China's state-run CNOOC and its parent China National Offshore Oil Corp. have been the most aggressive among Chinese oil giants in terms of acquiring overseas shale gas and oil assets. Since 2011, the two have spent over US $24.8 billion on overseas upstream assets, mostly in Africa, Australia and Canada.

The Nexen acquisition, China's largest single overseas investment, is vital for CNOOC's long-term growth and energy security, as its oil-and-gas output growth has been slowing since 2011 due to maturing fields.

"We strongly believe that the acquisition of Nexen conforms to our development strategy and will bring long-term benefits to our shareholders," CNOOC Chairman Wang Yilin said Friday.

The company proposed a final dividend of HK$0.32, up from HK$0.28 a year earlier.

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CNOOC Completes Nexen Buy; News Follows Sinopec-Chesapeake Deal

HONG KONG - News late Monday that China's state-run CNOOC Ltd. had completed its record-breaking purchase of Canada's Nexen Inc. came hot on the heels of another Chinese investment in the U.S. the same day, signaling that the appetite for North American shale projects in energy-hungry Asia remains strong.

CNOOC and Nexen said in separate statements they had completed the $15.1 billion acquisition following approvals from Canadian, U.K. and U.S., regulators, giving the third-largest Chinese oil and gas company by output control over huge shale-gas reserves in British Colombia and crude-oil deposits beneath the North Sea.

Hours before that, state-owned oil giant China Petrochemical Corp., or Sinopec Group, agreed to buy a 50% stake in Chesapeake Energy Corp.'s Mississippi Lime venture for $1.02 billion. In 2010 and 2011, CNOOC bought into Oklahoma City-based Chesapeake Energy's oil-rich shale fields in south Texas, as well as fields in Colorado and Wyoming.

The deals are a consequence of new technology that has unlocked huge amounts of gas and oil formerly trapped in shale-rock formations in North America, the funding needed to develop these, and moves by Canada to encourage foreign investment and find new customers for its future oil and gas output.

"CNOOC is delighted to acquire a leading international platform through the acquisition of Nexen," CNOOC Chairman Wang Yilin said in the CNOOC statement. "We strongly believe that this acquisition is a good strategic fit for us and will create long-term value for our shareholders."

Nexen said Kevin Reinhart would continue as the company's chief executive, while CNOOC CEO Li Fanrong will assume the chairmanship of Nexen's board. Nexen's shares will be delisted from the Toronto Stock Exchange in the coming days.

The Nexen acquisition, China's largest single overseas investment, is vital for CNOOC's long-term growth and important for its long-term energy security, as its oil and gas output growth has been slowing since 2011 due to maturing fields.

CNOOC is targeting oil and gas output growth at a compound annual rate of 6%-10% between 2011 and 2015.

Asian firms have completed $31 billion in outbound mergers and acquisitions in North America's oil, gas and mining sectors in the past year, according to data tracker Dealogic.

The Nexen-CNOOC deal follows the $5.2 billion purchase in December by Malaysian state-controlled energy giant Petroliam Nasional Bhd., also known as Petronas, of Canadian natural-gas producer Progress Energy Resources Corp.

Both CNOOC and Petronas are looking to export deep-chilled liquefied natural gas from Canada's west coast to Asian markets once approvals have been given and export facilities built.

Canadian Natural Resources Minister Joe Oliver on Monday signed a 25-year export licence for another project aiming to export to Asia: LNG Canada Development Inc., a consortium comprising Royal Dutch Shell, Korea Gas Corp., Mitsubishi Corp. and PetroChina International that is planning to build a terminal at Kitimat, British Columbia. That project still requires additional approvals.

"The Harper Government is aggressively working to open new markets for Canadian natural resources in the fastest-growing region of the world," Mr. Oliver said. Canada's natural gas exports currently go only to the U.S.

As part of its bid, CNOOC promised to keep Nexen's headquarters in Calgary, Alberta, and to transform those offices into the headquarters for CNOOC's North and Central American operations. Nexen confirmed those moves late Monday.

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Deadline Extended for CNOOC Takeover of Nexen

Canada's Nexen and China National Offshore Oil Corporation (CNOOC) have mutually agreed to extend the closing date of CNOOC’s $15.1 billion takeover of the Canadian oil and gas producer by 30 days to March 2, 2013, CNOOC confirmed Monday in a disclosure.

Nexen revealed the same in a statement released Sunday, adding that it would also postpone the release of its 2012 fourth quarter financial results. Nexen did not specify a date for the release of its results.

"Completion of the Agreement remains subject to the receipt of the United States regulatory approval and the satisfaction and waiver of other customary closing conditions. Key regulatory approvals have been received from Canada, the United Kingdom, the European Union and the People’s Republic of China," Nexen said in its issued statement.

In December last year, Canada approved CNOOC's proposed acquisition of Nexen, clearing a major hurdle for the Beijing-based energy giant in completing what would be China's biggest ever foreign acquisition. It is also the most ambitious bid by a foreign government-owned entity so far to enter North America's booming energy industry.

CNOOC and Nexen were already partners in developing Canada's oil sands. The Chinese company acquired Nexen's bankrupt partner, OPTI Canada Inc., which was involved in the Long Lake oil sands project, in 2011. CNOOC launched its all-cash bid for Nexen on July 23, offering $27.50 a share, or a premium of over 60 percent versus the share price on the last trading day before the two companies announced their proposed transaction.

As part of the acquisition, CNOOC will make Calgary the head office of its North and Central American operations. This office will oversee the operation and growth of Nexen's assets in North and South America, Europe and West Africa and CNOOC 's portfolio in Canada, the United States and Central America.

CNOOC plans to retain Nexen's current management team and employees, and intends to list its common shares on the Toronto Stock Exchange.

For CNOOC, the Nexen deal comes seven years after the Chinese company's 2005 failure to acquire Unocal Corp. for $18.5 billion.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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