China National Offshore Oil Co. Cuts Dividend to Pay for Nexxen Acquisition

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 US$15.1-billion purchase of Canadian oil and gas producer Nexen.

China National Offshore Oil Co., that country’s biggest offshore oil and gas producer, said Tuesday that first-half 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 a share to save up cash needed for the Nexen deal, part of CNOOC’s strategy of expanding aggressively overseas. That means it would 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 “long-term value” for shareholders.

via Calgary Herald

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