CALGARY - Calgary-based oil and gas producer Nexen Inc. (TSX:NXY), the target of China's largest foreign takeover bid to date, said Thursday it continues to expect the $15.1-billion deal to be completed by the end of this year.

There has been intense interest in the deal, both because of its size and because it may finally shed some light on the Canadian government's policy towards major foreign takeovers — particularly when state-owned companies are involved.

Nexen noted Thursday that the July 23 agreement with China National Offshore Oil Co. has been approved by its shareholders and that the final closing remains subject to regulatory approvals.

"We continue to expect the arrangement to close in the fourth quarter of 2012," Nexen said.

Most of the third-quarter financial report, however, was devoted to Nexen's operations in Canada, the North Sea, Gulf of Mexico and elsewhere.

Its net income fell to $59 million, or 11 cents per share in the third quarter from $109 million, or 20 cents per share in the second quarter.

In the third quarter of 2011, Nexen (TSX:NXY) had a net income of $200 million, or 38 cents per share.

The company attributed the fall in profits to lower cash flow and the impact of several non-recurring items.

At the same time, net debt dropped to $2.36 billion in the third quarter of 2012. It stood at $3.13 billion in the second quarter and $3.4 billion in the third quarter of 2011.

The federal government is in the process of studying whether the deal represents a "net benefit" to Canada.

The review process is expected to last until mid-November, after which it may be extended by further 30-day increments with the buyer's consent.

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  • Celtic Exploration

    The federal government approved the takeover of Alberta-based Celtic Exploration by Texas-based ExxonMobil in February 2013. The deal was believed to be worth $3.1 billion.

  • CNOOC-Nexen Takeover

    Calgary-based energy leader Nexen is in the middle of a massive takeover bid worth more than $15-billion by China energy China National Offshore Oil Company, or CNOOC. The deal is currently being reviewed by Canadian Industry Minister Christian Paradis.

  • Petronas' Progress Energy Takeover

    Stakeholders in natural gas producer Progress Energy Resources Corp. have approved a $6-billion takeover of the company by a subsidiary of Malaysia's state-owned Petronas. Meanwhile, the company said the sale to Petronas Carigali Canada Ltd. is not being opposed by the federal government under the Competition Act, which requires major takeover deals to be of net benefit to Canada.

  • Kuwait Petroleum

    Kuwait's state-owned petroleum company, Kuwait Petroleum Corp., has reportedly signed a preliminary deal to invest as much as $4-billion in a joint venture with Athabasca Oil Corp., for an investment to develop some of Athabasca's (TSX:ATH) oilsands properties in northern Alberta.

  • Petrochina

    In 2009, Athabasca sold a 60 per cent interest in its MacKay River and Dover oilsands lands to PetroChina. In Early 2012, Athabasca exercised its option to sell the rest of MacKay River to PetroChina, making it the first oilsands operation to be fully controlled by a Chinese company.

The prospect of a Chinese state-run enterprise taking control of a Canadian energy company has stoked much political furor.

The NDP has raised a litany of national security, environmental and human rights concerns with the CNOOC deal.

Opposition natural resources critic Peter Julian also calls the federal review process to secretive and says it doesn't set up clear enough guidelines on what constitutes a net benefit to Canada.

"There is a deplorable process in place. It's a mess," he said recently.

"It's difficult for Canadians to determine whether it's in the best interest of the country because they haven't put forward that clear definition of net benefit and a process that allows for public consultations."

Canada's spy agency raised a red flag on foreign investment by state-owned firms in its annual report earlier this year.

Though CSIS didn't name specific countries or companies it said certain state-owned enterprises have pursued what it called opaque agendas or received clandestine intelligence support for their pursuits in Canada.

Prime Minister Stephen Harper has said the Nexen-CNOOC deal "raises a range of difficult policy questions."

At a news conference in Senegal earlier this month, he said there's a national security angle that factors into Canada's relationship with China.

CNOOC and Nexen weren't strangers when the deal was announced.

Last year, CNOOC scooped up Opti Canada, Nexen's beleaguered minority partner in its troubled Long Lake oilsands project. The two firms also worked together in the Gulf of Mexico.

While Nexen's headquarters are in Calgary, its strategic importance to Canada is questionable. Only about 30 per cent of its forecasted daily production in 2012 is from its Canadian operations, with the vast majority coming from offshore platforms in the North Sea and elsewhere around the globe.

Both Nexen and CNOOC have sought to allay concerns about the deal.

CNOOC is to keep the Nexen name and expand the role of the company's Calgary headquarters to manage not just Nexen's operations, but also some $8 billion of the Chinese company's other assets in North and Central America.

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  • 10. Encana

    Brand value: $418 million Photo: Doug Suttles, president and CEO of Encana Natural Gas (The Canadian Press) Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 9. Canadian Natural Resources

    Brand value: $702 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 8. Syncrude

    Brand value: $933 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 7. Suncor

    Brand value: $936 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 6. Cenovus

    Brand value: $1.109 billion Photo: Brian Ferguson, president and CEO of Cenovus Energy (The Canadian Press) Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 5. TransCanada

    Brand value: $1.47 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 4. Husky

    Brand value: $1.607 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 3. Petro-Canada

    Brand value: $1.831 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 2. Esso (Imperial Oil)

    Brand value: $1.849 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 1. Enbridge

    Brand value: $4.726 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>


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  • 10. Oil And Gas Accounts For 4.8 Per Cent Of GDP

    The oil and gas industries accounted for around $65 billion of economic activity in Canada annually in recent years, or slightly less than 5 per cent of GDP. Source: <a href="http://www.ceri.ca/docs/2010-10-05CERIOilandGasReport.pdf" target="_hplink">Canada Energy Research Institute</a>

  • 9. Oil Exports Have Grown Tenfold Since 1980

    Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=9&SheetID=224" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 8. Refining Didn't Grow At All As Exports Boomed

    Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=104" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 7. 97 Per Cent Of Oil Exports Go To The U.S.

    Despite talk by the federal government that it wants to open Asian markets to Canadian oil, the vast majority of exports still go to the United States -- 97 per cent as of 2009. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 6. Canada Has World's 2nd-Largest Proven Oil Reserves

    Canada's proven reserves of 175 billion barrels of oil -- the vast majority of it trapped in the oil sands -- is the second-largest oil stash in the world, after Saudi Arabia's 267 billion. Source: <a href="http://www.ogj.com/index.html" target="_hplink">Oil & Gas Journal</a>

  • 5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.

    One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 4. Alberta Is Two-Thirds Of The Industry

    Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 3. Alberta Will Reap $1.2 Trillion From Oil Sands

    Alberta' government <a href="http://www.huffingtonpost.ca/2012/03/27/alberta-oil-sands-royalties-ceri_n_1382640.html" target="_hplink">will reap $1.2 trillion in royalties from the oil sands over the next 35 years</a>, according to the Canadian Energy Research Institute.

  • 2. Canadian Oil Consumption Has Stayed Flat

    Thanks to improvements in energy efficiency, and a weakening of the country's manufacturing base, oil consumption in Canada has had virtually no net change in 30 years. Consumption went from 287,000 cubic metres daily in 1980 to 260,000 cubic metres daily in 2010. Source: Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=6&SheetID=99" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 1. 250,000 Jobs.. Plus Many More?

    The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/OilsandsaCanadianjobcreator.aspx" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.