Industry Canada has approved the takeover of Alberta-based Progress Energy Resources by Malaysian fuel giant Petronas.
The government announced the decision on Friday afternoon, just six weeks after it rejected an earlier takeover proposal from Petronas.
Petronas resubmitted its bid for Progress Energy last month, saying it had "made additional representations and submitted further undertakings" in order to get Ottawa's approval.
The two companies announced earlier this week they would expand a planned liquefied natural gas they are planning in British Columbia if the deal were to be allowed.
The Progress-Petronas deal, along with the CNOOC-Nexen deal, which was also approved on Friday, drew a great deal of controversy, with many critics saying Canada shouldn't sell energy assets to state-owned foreign corporations.
The Canadian Press reports:
OTTAWA -- The federal government has approved the takeovers of two Canadian energy companies by Asian state-controlled firms.
Ottawa signed off on the takeover of Calgary-based Nexen by China's CNOOC and Progress Energy Resources by Malaysia's Petronas late Friday afternoon.
But in a wide-ranging update of foreign takeover rules, it has said it will only consider future takeover deals in the oilsands by state-owned companies in exceptional circumstances.
And all state-owned enterprises seeking to buy large Canadian companies will face greater scrutiny about how they operate and how much control their home governments would have over how they do business.
Prime Minister Stephen Harper says foreign state control of oilsands development has reached the point where further control would not be beneficial to Canada.
He says while Canada is open for business to foreign investors, it's not for sale.
CNOOC launched it's friendly $15.1-billion bid for Calgary-based Nexen in July, providing a series of guarantees to the Canadian government on job creation, head office location and corporate governance.
In a statement, Industry Minister Christian Paradis said he was satisfied that the deal would be a net benefit to Canada.
Nexen is a global oil and gas company that produced 207,000 barrels of oil equivalent per day at the end of 2011. In this April 25, 2012 photo, Nexen chief executive Kevin Reinhart addresses the company's annual meeting in Calgary. <em>With files from The Canadian Press</em>
Areas Of Operation
Only about 30 per cent of Nexen's production comes from its Canadian operations, with the rest coming from offshore platforms in the North Sea, Gulf of Mexico and West Africa.
CNOOC Ltd. is China's largest offshore oil and gas producer and is one of the largest oil and gas exploration and production companies in the world. At the end of 2011, it had 909,000 barrels of oil equivalent per day of production. Its Beijing-based parent, China National Offshore Oil Co., operates directly under the State-owned Assets Supervision and Administration Commission of the State Council of the People's Republic of China. CNOOC Ltd. shares trade on Hong Kong and New York stock exchanges.
On July 23, Nexen announced it had accepted CNOOC Ltd.'s all-cash offer of $27.50 per share, worth $15.1 billion. In a circular to shareholders a month later, Nexen revealed it had rejected two earlier CNOOC offers as too low.
61 per cent over Nexen's closing share price on the trading day before the deal.
CNOOC and Nexen had a relationship well before they announced their deal. In 2011, CNOOC acquired Opti Canada Inc., Nexen's beleaguered partner in the Long Lake oilsands project and the two have been working together on that project since. Later in 2011, CNOOC and Nexen formed a joint venture in the Gulf of Mexico. Around the same time, Nexen also agreed to sell a 40 per cent interest in some of its northeastern B.C. shale natural gas lands to a Japanese-led consortium.
Progress Energy Resources Corp. (TSX:PRQ) is a mid-sized natural gas producer with daily production of about 50,000 barrels of oil equivalent per day.
Areas Of Operation
Progress is the largest landholder in the Montney shale in northwestern Alberta and northeastern B.C. It is also active in Alberta's Deep Basin.
Petroliam Nasional Bhd, or Petronas, is wholly owned by the government of Malaysia. It has assets and interests in more than 30 countries and is heavily involved in the liquefied natural gas, or LNG, business.
Progress announced in late June it had agreed to Petronas' $20.45-per-share takeover offer. A month later, the Malaysian state-owned company sweetened its offer to $22 per share in order to trump a rival bid, bringing the deal's total value to $6 billion.
The sweetened offer is worth double what Progress shares traded at the day before the initial takeover deal was announced.
In mid-2011, Progress and Petronas formed a 50-50 partnership to jointly develop the some of the Canadian company's land in the north Montney. The two companies are also partnering on a liquefied natural gas terminal near Prince Rupert, B.C., that will be 60 per cent bigger if the takeover deal