Analysts interviewed by Reuters believed that state-backed oil giant China National Offshore Oil Corp (CNOOC) overpaid for Nexen Inc. CNOOC acquired the Calgary-based oil company for USD 15.1 billion in an all-cash deal completed on February 26 this year. After a failed bid for Unocal Corp of Los Angeles in 2005, the takeover of Nexen was considered a victory by CNOOC, especially by Vice Chairman Yang Hua, who was also part of the Unocal bid.
A banker who participated in the transaction said, "They learn from their mistakes and don't repeat them. In terms of the process, the Nexen deal was very smooth, and Yang was the key to that."
However, a Reuters special report revealed that the deal might have been a waste of money. Analysts told Reuters that CNOOC underestimated the risks of transforming Nexen's oil sands and shale-gas assets to money. Last year, official Chinese media reported that China's overseas investments had incurred USD 27 billion in losses.
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