Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Chinese energy giant China National Offshore Oil Corp (CNOOC) took over oil sands operator Opti Canada Inc. (TSXV:OPC) today in a deal valued at Cd$2.1 billion. This acquisition gives China’s top offshore oil company its second stake in a Canadian oil sands property.
With the close, reports Reuters, CNOOC gains a 35 percent stake in the troubled Long Lake oil sands project, which operates well below its 72,000 barrels per day capacity as operator Nexen Inc (NXY.TO) works to overcome problems with the C$6.1 billion project’s reservoir.
In a press release the newly appointed Chief Executive Officer of the CNOOC, Li Fanrong, said today that the“closing of this acquisition demonstrates that the company has further stepped into the oil sands business, which has become one of the important assets to the company’s global portfolio.”
He added that through partnership with Nexen, the Company expects to fully exploit the growth potential of the Long Lake Project and the three other jointly owned oil sands leases. “We believe that the project will contribute to the Company’s mid to long term reserve and production growth.”
Last week, Chinese investors said that they hoped to be wanted in Canada in an interview with the Globe and Mail in Beijing, as Canadian and Chinese executives gathered for the council’s annual general meeting.
It seems like they were very welcomed. In fact, Opti shares were halted on the TSX Venture Exchange pending the news. Before stock markets opened today, Opti said it had closed the sale of the company to the Chinese firm also known as CNOOC.
CNOOC is China’s largest producer of offshore crude oil and natural gas and one of the biggest independent oil and gas companies in the world.
Opti said it expects its shares to be delisted from the TSX Venture Exchange, effective Thursday, Dec. 1.
The takeover is one of many Chinese miners, oil companies and investment firms have made around the world as the country seeks secure supplies of minerals, oil and gas and other raw materials to feed its rapidly growing economy.
In Canada, Chinese companies have bought up miners, potash assets, oil sands interests and natural gas producers.
LongLake has been beset by a number of glitches since it began operating in 2008 that have prevented it from reaching is target production rate of 72,000 barrels per day,
Opti filed for court protection from creditors earlier this year and struck a deal this summer to be sold to CNOOC.
