CALGARY, TORONTO, ROME — Oil and gas producer Nexen Inc. is looking at tough measures, including selling overseas divisions, in a bid to improve its share price and defend itself against takeover bids, investment bankers say.
Multinationals such as Royal Dutch Shell, BP PLC and Total SA have long been interested in buying Nexen, which has a market capitalization of $11.5-billion, but are wary of making such a major acquisition in today's turbulent market. National oil companies from China and India could also bid on Nexen in order to secure a stake in the oil sands.
Total's board was reported to be meeting this week to consider a $17.7-billion bid for Nexen, but Thomson Reuters reported Wednesday that funding wasn't secured, and that Total was not going ahead with any offer. Shares in Nexen fell 8.5 per cent Wednesday on the news.
Even though the speculation has been dampened for now, there's no question Nexen is more vulnerable than most to a potential takeover. The company has long been the subject of speculation because of its strong asset base, depressed share price, and its small size in comparison to Canada's other large producers.
Mr. Romanow, Nexen's chief financial officer who takes over as CEO in January, is prepared, say analysts and financiers, to buttress against potential bids.
“Nexen has considered selling [its assets in Yemen] and plowing the cash back into a share buyback, but do you really want to be selling assets into this environment?” said one investment banker familiar with the company. Nexen's Yemen properties are likely worth between $1-billion and $1.25-billion, with oil trading where it is today.
The company's crown jewels are its North Sea holdings, worth $7.2-billion according to Peters & Co., and its Canadian oil sands properties, worth $8.5-billion. Nexen declined requests for an interview with Mr. Romanow and wouldn't comment on its future plans.
Paul Floren, the head of press relations for Total in Paris, said the company wouldn't comment on reports of the potential offer for Nexen or the financing, saying it “does not comment on market rumours.”