CNOOC Confident on Nexen Deal After Talks

China's CNOOC Ltd believes it is poised to win Canada's go-ahead for the $15.1 billion purchase of oil producer Nexen Inc, after talks with provincial leaders boosted its confidence that Canada values China as an investor in its huge oil sands sector and as a future energy customer, sources said.

CNOOC's proposed acquisition is raising worries inside Canada's federal cabinet, where some are wary of letting a Chinese state-owned enterprise buy up domestic assets. Some Canadian newspapers also published polls recently showing that a majority of Canadians surveyed opposed the sale - fuelling concerns among investors that the deal might be blocked.

Shares of Nexen have been trading well below CNOOC's C$27.50 ($27.97) per share offer, a 61 percent premium to the price of Nexen shares before the bid, due to concerns that public opposition will convince the government to block the deal. It closed at C$24.91 in Toronto on Wednesday.

But in a sign that Ottawa would likely approve the deal, a delegation of Canadian provincial leaders held meetings with CNOOC in Beijing earlier this month and none of the Canadian premiers voiced concern about the proposed deal, sources familiar with the meetings told Reuters.

CNOOC Chief Executive Officer Li Fanrong told the premiers - who do not sit on the committee reviewing the CNOOC bid but are believed to be highly influential in the review process -- that the deal had been structured to meet Canadian regulations and will benefit Canada as well, the sources said.

"Mr Li did a very good job in his meeting with premiers, trying to demonstrate that CNOOC was not interested in extracting resources but they are there to be part of the community, to benefit Canadians," one of the sources said.

Asked whether any of the premiers expressed support for the deal, he said: "I think you may not hear a premier stand up and say: This is a great deal for Canada. But what's most important is nobody stands up and says this is a bad deal for Canada. So I think this will be approved."

CNOOC, which has won approval from Nexen shareholders for the acquisition, has promised to retain all Nexen employees and make Calgary its headquarters for its Americas operations. It will also pursue a secondary listing of its shares in Toronto.

The other source, a senior Chinese oil industry executive with direct knowledge of the matter, said CNOOC had "candid exchanges" on the acquisition with the Canadian premiers and CNOOC views their support as important for the deal.

The Canadian officials, including Alison Redford, premier of Alberta where Nexen is based and where most of Canada's oil sands are located, were in Beijing to promote Chinese investment in Canada's natural resource, education and agricultural sectors. Redford has voiced support for the deal.

The second source said CNOOC had anticipated a potential negative reaction from Canada before it launched the Nexen bid. Industry analysts expect Ottawa to make a final decision on the bid around end-November.

CNOOC declined to comment.

The deal, if completed, would mark China's largest ever overseas acquisition and the first outright takeover of a large Canadian energy producer by a Chinese state-owned enterprise. Canadian industry ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada.