Canadian ESG Leader Nexen Acquired by Chinese Enterprise

The much-discussed deal for the acquisition of Canadian ESG leader Nexen by Chinese state-owned CNOOC was completed yesterday, with a total value of $15.1B. According to company statements1,2, energy company Nexen will operate as a subsidiary of CNOOC with continuing leadership by CEO Kevin Reinhart, who has been an employee of Nexen for over 18 years. A new Board of Directors has been formed, and will be lead by Li Fanrong, CEO of CNOOC. Business, including operations in Western Canada, the North Sea, offshore West Africa and the Gulf of Mexico, will continue to be managed from the company’s Calgary office. Ranked among the best large companies globally on ESG performance, Nexen placed 71st on the 2013 Corporate Knights Global100 and 89th in 20123. With robust programming and a longtime CSR commitment, there has been concern that the acquisition by CNOOC would lead to the watering down of existing programs. A member of the UN Global Compact since 2001, Nexen was named to the Carbon Disclosure Leadership Index (CDLI) for 2011 by the Carbon Disclosure Project (CDP) and won the 2012 Corporate Reporting Award for Oil and Gas for overall financial and sustainability reporting from the Canadian Institute of Chartered Accountants. Prime Minister Stephen Harper has taken criticism for allowing the sale of a Canadian energy asset to foreign interests. But front-running Liberal Party leadership candidate Justin Trudeau has also supported the deal as part of trade expansion with Asia and job creation for middle-class Canadians. Chinese investors also see the deal as a strong expansion opportunity. Mr. Li Fanrong, Chief Executive Officer of the Company, commented, “Nexen is a strong, diverse company with attractive growth prospects, a large resource and reserve base, high potential exploration prospects, and high quality talented employees capable of extracting the value of these assets. We will thoroughly utilize the platform it provides to further our overseas business.” When the takeover was approved by Industry Canada in December, the Minister of Industry assured Canadians that "to demonstrate that the transaction is likely to be of net benefit, CNOOC has made significant commitments to Canada in the areas of: governance, including commitments on transparency and disclosure; commercial orientation, including an adherence to Canadian laws and practices as well as free market principles; and employment and capital investments, which demonstrate a long-term commitment to the development of the Canadian economy.” Mr. Reinhart also assured investors last September that CSR commitments would continue. 1 2