Nexen, Progress Energy shares rally on takeover approvals
Despite new restrictions, government says Canada still open to foreign investment
Shares of Nexen Inc. and Progress Energy Resources closed Monday trading with double-digit gains as investors in the two firms welcomed news that Ottawa would approve their takeover by foreign state-owned enterprises.
Nexen stock was up $3.15 to close at $26.44 in TSX trading — a jump of almost 14 per cent. Progress Energy shares rose by a similar amount, up $2.59 to $21.96.
But shares of some smaller oilsands companies dipped on worries that the federal government's restrictive new conditions on takeovers by state-owned companies would make it less likely that other firms would be targeted in similar takeover bids.
Connacher Oil and Gas dropped six cents to 21 cents, while stock in Athabasca Oil Corp. slipped 25 cents to $10.00.
MEG Energy Corp. slumped $1.07 to $33.65 by late afternoon, when trading was halted while the company released updated production guidance and announced $800 million in new financing. China's state-owned oil firm, CNOOC, owns 14.2 per cent of MEG.
Natural Resources Minister Joe Oliver tried to reassure oil producers Monday that the new rules won't lead to a slowdown in resource development.
Following a speech to the Canadian Association of Petroleum Producers, Oliver said there was still "plenty" of private money available to develop the oilsands and said the new rules Ottawa is imposing won't hurt development because he said there is a "huge amount of capital available globally and quite a bit available inside our country."
While the new restrictions do make it more difficult for state-owned foreign enterprises to acquire Canadian firms, Oliver said Canada is still open to those firms taking minority positions in Canadian companies through joint ventures.
'A level of discomfort'
Industry Minister Christian Paradis said on the weekend that the federal government had reached "a level of discomfort" with foreign investment by state-owned enterprises in Canada's energy sector.
It was Paradis who formally gave the green light Friday to a $15.1-billion bid for Nexen Inc. by Chinese state oil company CNOOC and a $5.2-billion bid by Malaysia's Petronas for Progress Energy. But the government signalled at that time that it would approve any further takeovers of Canadian oilsands producers by state-owned firms only "in exceptional circumstances."
In an interview Saturday on CBC Radio's The House, Paradis said that CNOOC was able to show that its bid for Calgary's Nexen was likely of "net benefit" to Canada after the Chinese state-owned enterprise made "significant undertakings" in areas of governance, transparency and disclosure.
During his announcement on Friday, Prime Minister Stephen Harper said the government had concluded that "foreign state control of oilsands development has reached the point at which further such foreign state control would not be of net benefit to Canada."
"When we say Canada is open for business, we do not mean that Canada is for sale to foreign governments," Harper said.
"To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead."
With files from The Canadian Press