China pays lessthan $20 per barrel for N, American Crude Oil.

[Sonny]

China buys Nexen
http://www.bloomberg.com/news/2012-0...-overseas.html

China’s largest offshore oil and gas explorer is paying $27.50 for each common share, a premium of 61 percent to Calgary-based Nexen’s closing price on July 20, according to its statement to the Hong Kong stock exchange today. Nexen’s board recommended the deal to its shareholders.

http://www.google.com/finance?q=NYSE:NXY

“Cnooc did a nice job in adding oil reserves at less than $20 a barrel,” said Shi Yan, a Shanghai-based energy analyst at UOB-Kay Hian Ltd. “It’s really a good time to buy assets while crude prices are low and energy firms shed values in stock markets.

The Chinese company is paying (CASH) 8.84 times earnings before interest and tax for Nexen, compared with the median of 33.06 of ten comparable deals, according to data compiled by Bloomberg. The Beijing-based company will add 900 million barrels of oil equivalent reserves at $19.94 per barrel through the deal, according to a document posted to the company’s website.

~

Meanwhile Obama is still squandering Billions of Borrowed Stimulus Money on his vision of a Green America revolution , financing green startup companies that seem to just go bankrupt almost as soon as their checks from the FED clears the bank. like WTH is with that guy.

~~

[Sonny]

By Bloomberg News - 2012-07-24

China’s government said it will “proactively” invest in energy projects abroad to secure reliable supplies for its expanding economy, a day after the announcement of two overseas acquisitions for $16.6 billion.

NDRC said in their 23-page plan.
“China will invest in overseas energy and mineral resource development projects to secure long-term, stable, reasonable and secure supplies of energy and resources,”

http://www.bloomberg.com/news/2012-0...-purchase.html

-----------------------

Oil Drops a Second Day on China Slowdown, Europe Crisis
http://www.bloomberg.com/news/2012-07-23/oil-declines-a-second-day-in-new-york-amid-europe-debt-concern.html

By Ben Sharples and Yee Kai Pin - 2012-07-23

Oil dropped the most in almost two weeks in New York amid speculation global fuel demand will falter as China’s economy slows and Europe struggles to control its debt crisis.

Futures slid as much as 2.2 percent after a Chinese central bank adviser said the nation’s economy may cool further. International creditors meet in Athens tomorrow amid concern Greece may not meet its bailout targets, and after an aid package for Spain failed to prevent the euro declining to the lowest in more than two years against the dollar.

Iraq resumed oil exports to Turkey after an explosion shut a pipeline that carries as much as 350,000 barrels a day, Sumaria News reported July 21, citing an unidentified Iraqi official.

“Europe’s debt crisis is continuing and China is becoming a concern,”

Ken Hasegawa, a commodity-derivative sales manager at Newedge Group in Tokyo, said by phone. “There’s also still a lot of crude-oil supply in the market, so everyone understands the upside for prices will be limited.”

~

[Potemkin]

How dare they!

Everyone know that Canadian oil rightly belongs to the US!.

[dyrt]

I remember years ago, when the Japanese were buying assets all over the place and crowing about the bargains. They even bought Rockefeller Center. To some, it was the end of America. But they did not hang on to it for long and ended up selling it for a lot less than they paid.

I think the Chinese are in denial about the world's economics and their ability to keep growing.

[Potemkin]

Originally Posted by dyrt

I remember years ago, when the Japanese were buying assets all over the place and crowing about the bargains. They even bought Rockefeller Center. To some, it was the end of America. But they did not hang on to it for long and ended up selling it for a lot less than they paid.

I think the Chinese are in denial about the world's economics and their ability to keep growing.

LOL, I remember that.

Then, as now I think the top two foreign investors and owners are:

#1 Canada
#2 United Kingdom

No one ever mentions that.
(No I don't have a problem with that.)

[Brihard]

They're not 'paying $20/bbl for N.A. crude oil". That's entirely a fabrication.

They have bought the company, absolutely. This does not lessen the actual extraction costs of taking oil out of unconventional deposits, which is Nexen's focus. It does not eliminate the royalties that will be paid to the Canadian government. The subsidiary will still need to sell its products at sufficient markup on production costs to ensure that they can meet any debt obligations and pay all their costs.

Most of Nexen's production is outside of North America, and their N.A. production is bitumen extraction, which then needs to be refined into oil products.

Nexen was already fairly priced by the market, and the CNOOC acquisition is a HELL of a nice premium on the trading price, one that is rewarding recent shareholders richly, and salvaging the stock for those who bought in several years ago. Nexen was a somewhat troubled company, and this was reflected in its low P/E ratio.

This is also a huge validation for those venture companies that are still 'juniors' in the Canadian oil sands, and should help to buoy share prices for companies that have slid as oil prices have receded of late. The buyout also injects a lot of money back into institutional and retail shareholders who will likely consider putting much of it back into the same sector.

Coupled with the inter-province haggling right now over the Alberta-B.C. pipeline, this is a very interesting piece of news for our energy sector.

[CanadaSue]

Have a piece of it?

[dharma]

Calling Nexen "somewhat troubled" is being very kind. Nexen is well-known in the patch for being a fantastic collection of assets that has been badly managed.

The Chinese take the long view. When you buy a company lock, stock, and barrel, changing the management is not a problem.

[Brihard]

Nope, unfortunately not. Ah well.

[Potemkin]

Originally Posted by Brihard

Most of Nexen's production is outside of North America, and their N.A. production is bitumen extraction, which then needs to be refined into oil products.

Nexen was already fairly priced by the market, and the CNOOC acquisition is a HELL of a nice premium on the trading price, one that is rewarding recent shareholders richly, and salvaging the stock for those who bought in several years ago. Nexen was a somewhat troubled company, and this was reflected in its low P/E ratio.

This is also a huge validation for those venture companies that are still 'juniors' in the Canadian oil sands, and should help to buoy share prices for companies that have slid as oil prices have receded of late. The buyout also injects a lot of money back into institutional and retail shareholders who will likely consider putting much of it back into the same sector.

Coupled with the inter-province haggling right now over the Alberta-B.C. pipeline, this is a very interesting piece of news for our energy sector.

I went and looked at Brihard's car in the parking lot and saw the following bumper sticker on it.

[Brihard]

Ew. God no. Our libertarians are almost as bad as yours. I spent too many years in school to further indulge in academic fantasy.

[CanadaSue]

He lies. He's just not into that shade of green.

[Sonny]

The US Government was paying over $120 per barrel for crude oil for The Strategic Oil Reserve (SRO) (770million bbl). But in 2008 at the urging of Congress oil purchases for the SRO were halted because of public perception that they were contributing to sky high fuel prices. And then after the great collapse crude fell to $40/bbl in 2009, But the US did not resume purchases of oil for the SRO then even though oil was then just 1/3 the price it had been. ? Also at that time, 2009 and 2010, China's state-own oil companies went on a $50 billion global spending spree buying foreign oil companies and oil partnerships.

Whereas The US gov invested $Trillions in the name of it's US citizens, buying up worthless MBS bonds and derivatives from the big casino banks.

-- but I degress..

Years ago this same Chinese company, CNOOC was the one who made offer to buy UNOCAL, but the deal didn't go through due to public outcry, Pote can fill ya in on that better than I as I wasn't interested about that back then.

Ok, so Nexen has 900 million barrels of oil equivalent (MMBOE) of proved reserves and 1,122 MMBOE of probable reserves and that purchase will increase CNOOC's proven reserves by %30. So the $15 billion purchase price for NXY and it's 900 million bbls works out to less than $20/bbl.

You got to hand it to the Chinese. In order to be sustainable who have to make profits. That's the kind of green we need.

~

[Sonny]

Heated debate from government, business, union leaders to Nexen takeover news

The proposed takeover of Calgary petroleum producer Nexen Inc. by a Chinese state-owned oil company sparked a fiery debate Monday, with the Alberta government welcoming foreign investment as opposition parties, unions and some business leaders urged caution.

Read more: http://www.calgaryherald.com/busines...#ixzz21epBxlWJ

huh, how bout that?

[Sonny]

Nexen's technology is China's key to steal Vietnamese and Philippine offshore oil reserves in the South China Sea. But hey, It's in America's Interest.

http://opinion.financialpost.com/201...cas-interests/

Derek Scissors and Dean Cheng, Financial Post Jul 27, 2012

~

[Potemkin]

Originally Posted by Potemkin

How dare they!

Everyone know that Canadian oil rightly belongs to the US!.

HAHA I love being right.

Shumer and Markey says "How DARE the Canadians sell Nexen to the Chinese!".

http://spectator.org/archives/2012/0...ugly-americans

The New Ugly Americans

By William Tucker on 8.3.12 @ 6:09AM

Naturally, Chuck Schumer is one of them, sabotaging America's energy security and world standing.

One of the saddest and most tragic spectacles in history is to witness a nation trying to exercise its power long after the economic origins of that power have gone into decline. Think of Austria languishing as the rest of Europe industrialized or France trying to defend itself against Germany in 1940 or even Russia trying to play the Cold War combatant as Communism rotted it from within.

Today we are undergoing a similar dance in our economic relation with China. And wouldn't you know, it's our liberal friends in Congress, so enthusiastic about hamstringing American enterprise, who are the last to realize that they are undercutting our political hegemony as well.

I am speaking, of course, of Senator Charles Schumer of New York and Representative Edward Markey of Massachusetts, both of whom have decided we are in a position to tell a Chinese company that it cannot acquire a Canadian company because… well, because we're Americans and the world has to pay attention to what we say.

Here's the setup. Last week the Chinese National Offshore Oil Company (CNOOC) offered $15 billion to buy Nexen, a Canadian drilling company with large holdings in the Athabasca Tar Sands of Alberta, which is rapidly becoming Canada's pot of gold in energy development. Now it so happens that only six months ago the Canadians were planning to ship nearly all of this newly developed oil to Texas via the Keystone Pipeline. Environmentalists, however, swore the pipeline would be built over their dead bodies and President Obama, not wanting to be left with no natural constituencies except single mothers and minorities, decided to appease environmentalists and block the pipeline.

The Canadians were shocked. They had long planned to sell this oil south of the border. Canada is already our largest supplier of foreign oil and it was inconceivable that we wouldn't want to take more it instead of relying on Iraq, Nigeria, Venezuela, and other unpredictable sources. All this brought the sudden realization that Canada is dependent on us for 97 percent of their oil exports. Prime Minister Steven Harper quickly decided it was time to diversify. He took a well-publicized trip to China and the Nexen purchase was one of the first results.

Like any other voluntary exchange, the deal will bring benefits to both sides. Canada is actually running short of capital in developing its tar sands resources and China's investment will help. At the same time, China wants access to both oil resources -- something they are pursuing around the world -- and Western knowledge and technology. Nexen has some very sophisticated expertise in offshore drilling

In passing, it might be worth noting that the Canadians are becoming very prosperous at this. They are developing resources in a way that we aren't. They've also gotten control of their government. They recently passed the U.S. in average income and are starting to purchase US resources. A recent analysis of the Phoenix housing market found it was beginning to come back because of an influx of Canadians buying second homes.

So who could possibly be opposed to all this? Well, liberal Democrats, of course. They can't stand the idea of anybody getting rich without being able to tax them. Nor can they countenance the idea of people just going out and doing things without asking permission. Remember, "You didn't build that. Somebody else did," and so when two entities, even foreign corporations, do things without permission the government has to intervene.

And so our friend Chuck Schumer fired off a letter asking Treasury Secretary Timothy Geithner to block the deal until the Chinese government takes "concrete, enforceable steps to open that country's markets to foreign investment and level the playing field in international trade."

It is rare that we have so much leverage to exert upon China. We should not let this window of opportunity pass us by. At some point, we have to put our foot down over China's refusal to play by the rules of free trade.

Markey followed with a letter demanding that Geithner insist that CNOOC pay royalties on tracts that Nexen recently won in the Gulf of Mexico where the government offered them royalty-free. "I believe this merger could lead to a massive transfer of wealth from the American people to the Chinese government, and I strongly urge you to block this proposed transaction until, at a minimum, parties to the merger agree to pay royalties to the U.S. taxpayer on all oil produced off American shores or relinquish any ownership interests in these leases," Markey fulminated.

As Christopher Helman points out in Forbes, these assets in the Gulf of Mexico that supposedly offer such a "rare" opportunity for "leverage" consist of 200 leases worth $1.5 billion, less than 10 percent of Nexen's net worth. Most of them have not been explored yet. The reason they were let out royalty-free is that they are very difficult and unpromising areas that few companies were eager to risk. If the government had asked the usual 18 percent, no one might have bid at all. It will cost hundreds of millions to explore and hundreds of millions more to develop if oil is discovered. If the U.S. seriously tries to exercise this "leverage," CNOOC-Nexen will probably just sell them off.

[Brihard]

Yup. That's a trivial part of Nexen's assets, and I suspect CNOOC will just sell them rather than bother with the rigamarole of pleasing Congress. Hell, it would provide capital for more oil sands development.

Oh yeah- and suck it, Schumer.

[Kassy]

"I believe this merger could lead to a massive transfer of wealth from the American people to the Chinese government"

Luckily outsourcing production to China makes the American people rich which is why we didn't need to wait for "concrete, enforceable steps to open that country's markets to foreign investment and level the playing field in international trade" (nevermind level treatment of workers).