CALGARY – The head of CNOOC Ltd. said the Chinese-state-owned firm is in no hurry to do any more big deals in the oilpatch since its $15.1 billion takeover of Nexen closed earlier this week.
“In the very short term, this is not my priority,” said chief executive Li Fanrong at Nexen’s Calgary headquarters Wednesday.
“My priority is to get this organization right and to better realize the full potential of Nexen’s resource.”
Through the deal, CNOOC will see a 20 per cent increase in its yearly production and a 30 per cent increase in its reserve base, said Li, who will chair Nexen’s new board.
Kevin Reinhart, who will remain in charge of Nexen’s operations, as well as $8 billion in CNOOC assets that will be managed out of the Calgary office says there is more than enough opportunity to grow what Nexen already has.
“And so the need to go outside and acquire for future growth has never been a big part of Nexen’s growth strategy and it doesn’t need to be,” he said. “We’ve got lots of internal organic opportunities around the world to pursue.”
Nexen operates in the North Sea, Alberta’s oilsands, northeastern B.C., the Gulf of Mexico and West Africa.
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Both Li and Reinhart say it will be “business as usual” for Nexen’s 3,000 employees. There was a town hall meeting in Calgary earlier Wednesday to answer workers’ questions.
Reinhart said there was “abnormally low” turnover since the deal was first made public last July, as many of those employees had long-term incentive programs tied to the deal closing.
And Reinhart says he doesn’t foresee a mass exodus now that the transaction is done.
“People like working for Nexen. They’re proud of working for Nexen,” he said.
“And it’s a big reason why CNOOC is leaving the autonomy that we have, keeping the Nexen name, keeping the Nexen values.”
Reinhart added there’s virtually no overlap between CNOOC and Nexen, so employees aren’t anxious as to whether they will continue to have their jobs.
“Financially, they’re at least as well off staying here,and the opportunity here to work the same assets and work with the same team – why would you go and take the risk of starting employment elsewhere?”
CNOOC outlined a number of commitments when the takeover was announced, including keeping the head office in Calgary and listing its shares on the Toronto Stock Exchange.
Reinhart says negotiations with Ottawa in the following months dealt with the finer details of those commitments.
The CNOOC-Nexen deal touched off a great deal of controversy about what degree foreign state-owned control of Canadian resources is acceptable.
That the deal came from a Chinese company, in particular, raised concerns in some quarters about doing business with a non-democratic state.
But there was also acknowledgment that Canada does not have the capital necessary to develop its own resources alone, and that overseas investment is needed.
The Conservative government finally decided in December that the deal would be of “net benefit” to Canada under the Investment Canada Act, but that future deals of that type would be held to greater scrutiny.
Reinhart said he wasn’t perturbed the process took so long.
“These are big decisions. What’s important is you take the right time to make the right decision,” he said.
“And so the fact that it took as long as it did is totally irrelevant because we believe that both sides took the right time to get to the right answer.”
Ottawa has signalled that deals that give state-owned enterprises control over the oilsands would only be allowed in “exceptional circumstances” from now on, but that partnership deals would continue to bring capital into the sector.
About two weeks ago, Nexen received U.S. government approval. Reinhart declined to comment on those negotiations.
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