CNOOC Continues NOC Drive into US with Nexen Gulf of Mexico JV

One day after Nexen Inc. sold a 40% share in certain gas assets in British Columbia for $700 million, the Canadian oil company formed a joint venture with China’s CNOOC Ltd. in the Gulf of Mexico.

The Chinese offshore oil company will hold a 20% working interest in the Kakuna, Angel Fire, and Cypress deepwater exploration wells with an option for a 10%-25% working interest in three other exploration wells.  Financial terms were not disclosed.

Drilling at the Kakuna well is currently in progress and Nexen expects to spud the Angel Fire well in 2012.

The deal comes one day following Nexen’s sale of a 40% interest in its Horn River, Cordova and Liard Basin holdings for $700 million to a group led by the Japanese company Inpex Corp.

Both deals are in line with the trend of IOCs and NOCs entering North America in search of natural resources. In Wood Mackenzie’s January annual review of global upstream M&A, the firm predicted aggressive spending by the Asian National Oil Companies as one of the drivers of merger and acquisition activity in 2011.

In a note to investors November 30, Global Hunter Securities added that Nexen’s latest transaction with CNOOC is representative of the continued hunger for resources, but points out that the search isn’t focused exclusively on US unconventional resource plays such as the currently popular liquids-rich Eagle Ford and Utica shale plays.

“While many of the previously inked JV’s have focused on US unconventional resource plays, foreign operators are also interested in Canadian unconventional plays, such as the oil sands and conventional offshore drilling,” said the analysts.

(wordpress.com)