The Chinese company agreed to pay $27.50 per share, a 61-percent premium over the July 20 closing price for Nexen on the New York Stock Exchange.
"This transaction delivers significant and immediate value to Nexen shareholders,
Nexen Chairman Barry Jackson said in a written statement. "The board is unanimous in its view that the transaction is in the best interest of Nexen and recommends shareholders vote in favor of the transaction."
The cash transaction is expected to close in the fourth quarter and will add Nexen's 900 million barrels of proven oil-equivalent reserves to CNOOC's global assets. Nexen also holds more than 1.1 billion barrels of probable oil-equivalent reserves.
The deal brings one of the leading developers of Canadian oil sands into the CNOOC portfolio. Nexen also has interests in the production of conventional and shale gas in Canada as well as offshore production in Nigeria, the Gulf of Mexico and the North Sea.
"The acquisition reflects our strong belief in Nexen's rich and diverse portfolio of assets and world-class management and employees," said CNOOC Chairman Wang Yilin. "This is an exciting opportunity for us to build on our existing joint venture relationship with Nexen in Canada, and to acquire a leading international platform in the process."
CNOOC, a privately held company, has been active in Canada for nearly a decade, Nexen said in its statement. It holds stakes in three other Canadian energy companies: MEG Energy, Inc; Northern Cross (Yukon) Limited, and OPTI Canada, Inc.
CNOOC said it had no plans to cut Nexen's workforce and was committed to carrying out Nexen's current capital investment strategy over the near term. The Chinese company will base its North and South American operations out of the Nexen headquarters in Calgary.
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