Chinese energy giant CNOOC Ltd. said Tuesday that it is slashing its dividend amid falling profits and the need to conserve cash for its proposed $15.1-billion US purchase of 91原创 oil and gas producer Nexen.
China National Offshore Oil Co., China's biggest offshore oil and gas producer, said firsthalf profit fell 19 per cent as costs rose and a big oil spill in China's Bohai Bay cut production.
The company cut its dividend by 40 per cent to 15 Hong Kong cents ($0.02 Cdn) a share to save up cash needed for the Nexen deal, part of CNOOC's strategy of expanding aggressively overseas.
That means it will pay out US$600 million less to shareholders than it did last year.
"Through the transaction, we will be able to expand our overseas business and resource base, enhance our presence in Canada, Gulf of Mexico and Nigeria, and enter the resourceful U.K. North Sea," chief executive Li Fanrong said in a statement, adding that the deal would create "longterm value" for shareholders.
In July, the Beijingbased company, one of China's three major stateowned oil and gas producers, made a friendly $27.50 US per share offer for Nexen, the latest sign of China's hunger for overseas energy assets.
The company trades on both the New York and Toronto stock exchanges.
If the deal goes through, it would be China's biggest overseas energy acquisition.
However, the offer for Calgary-based Nexen has run into political obstacles in both the U.S. and Canada.
Although Nexen is based in Canada, it has offshore holdings in the U.S.
Gulf of Mexico, which CNOOC has said means the deal requires approval from U.S. regulators.
It must also be approved by the federal Competition Bureau and Investment Canada as being of net benefit to Canada.
