Energy Business Review: Cnooc BUYS Nexen, NRG MERGES With GenOn

Here are Monday’s top stories:

Cnooc Limited (NYSE:CEO) purchases Canada’s Nexen, Inc. (NYSE:NXY) at a price of $15.1 billion, or $27.50 per share, which represents a 61 percent windfall to Nexen’s Friday close. Observers are cautiously optimistic that this present deal can go through, even though Cnooc’s previous try at a large North American acquisition fell apart, which was its 2005 offer for Unocal. It’s generally believed that Canada is more favorable to okay such a deal than would the United States, and one analyst remarked that “Cnooc did a nice job in adding oil reserves at less than US$2 per barrel”, adding that, “It’s really a good time to buy assets.” One factor behind the agreement is that China’s economy is desperate for oil; the country imported 5.6 million barrels of oil per day in the first half, which was up 11 percent year-over-year, even with its stalling economy, and forecasts have the figure at past 12 million barrels per day by 2035. Meanwhile, Nexen’s shares went through the roof Monday.

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NRG Energy, Inc. (NYSE:NRG) is merging with GenOn Energy, Inc. (NYSE:GEN), which will create the largest competitive power generation company in the United States. Shareholders of the latter will receive 0.1216 of a share of NRG common stock for each GenOn share of common stock, which represents a 20.6% windfall to GenOn shareholders. NRG shareholders will thus own 71 percent of the combined firm, and GenOn shareholders will own 29 percent. Tudor Pickering Holt called it “Another great acquisition for NRG, with announced synergy value paying for 67% of deal equity cost,” In addition, NRG has declared its first ever quarterly dividend.

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