The $230-million Chinese takeover of Canadian oil-and-gas junior Novus Energy Inc. was finalized Monday, with officials from the state-owned company saying there's more investment in Canada to come.
"The acquisition of Novus Energy is one very important step in terms of Yanchang Petroleum Group's … development strategy," said Shen Hao, chairman of Shaanxi Yanchang Petroleum (Group) Co. Ltd., China's fourth-largest oil producer.
"Next Yanchang Petroleum Group is expecting to further enhance their investments in Canada, using Novus Energy as their development platform," he said, speaking through an interpreter at a Calgary press conference.
The sale of the company is a clear example of smaller oil patch deals – nowhere near the size, say, of China's CNOOC Ltd.'s $15.1-billion acquisition of Nexen Inc. – that are more doable in a period of tepid deal making in Canada's energy sector.
Shareholders of the light-oil focused Novus will receive $1.18 per common share. Novus chief executive officer Hugh Ross said the company, which already has holdings in Saskatchewan's Viking oil play and Alberta, plans a series of acquisitions, first in their core plays "then you'll see us branch out to a number of other acquisitions." Mr. Ross added the name Novus will remain "for now." Novus will become a part of Yanchang Petroleum International Ltd., the Hong Kong-listed subsidiary of Shaanxi Yanchang Petroleum, which is owned by the provincial government of Shaanxi rather than the central government in Beijing, as is the case with many other stated-owned Chinese firms.
The deal is not reviewable under Ottawa's Investment Canada Act, meant to examine significant investments in Canada by non-Canadians, as it falls under the monetary threshold and is not an oil sands-related deal.
Speaking at the event, Alberta Energy Minister Diana McQueen said the province has a long history of welcoming foreign investment.
"Alberta has a keen interest to continue to attract Chinese investment, as it is a great benefit to our province," she said.
"Oil and gas activity is capital-intensive, and as such, the development of these resources requires foreign investment, both private and state-owned."
With the completion of the deal, Novus shares will be delisted from the TSX Venture Exchange in a few days.