Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, July 20, 2011

China National Offshore Oil Corp To Pay $2.1 Billion, Revive Troubled Long Lake Oil Sands Project

THE CANADIAN PRESS -- CALGARY - China's largest offshore energy producer is preparing to snap up Opti Canada Inc. in a $2.1-billion deal announced Wednesday, a week after the Calgary-based oil sands developer filed for court protection from its creditors.

If the deal goes as expected, China National Offshore Oil Corp., or CNOOC, will get a 35 per cent stake in the troubled Long Lake oil sands project, which has fallen well-short of production targets since its late 2008 startup.

"CNOOC Ltd. is a technically experienced and well-capitalized company that is equipped to support further development at Long Lake and future expansions in the Canadian oil sands," Opti president and CEO Chris Slubicki said in a statement.

Yang Hua, the CEO of CNOOC, said the transaction strengthens his company's oil sands presence, which already includes a 14.2 per cent stake in junior developer MEG Energy Corp. (TSX:MEG).

"We believe that upside potential of the assets will facilitate local energy supply and our production growth in the long term."

Under terms of the agreement, CNOOC will pay $1.18 billion to lenders who hold Opti's second lien notes and assume responsibility for paying $825-million of first lien notes.

The Chinese company will also pay $37.5 million to parties that had agreed to help finance the court-supervised restructuring and $34 million to Opti shareholders, who were going to get no cash for their stock in the restructuring.

The oil sands developer has lost more than 90 per cent of its share-price value over the past year, and the Toronto Stock Exchange is in the midst of a delisting review.

One major challenge for Opti was the inability for Long Lake to churn out the 72,000 barrels per day it was designed to produce. In its most recent quarter, Long Lake only produced about 27,900 barrels daily.

Unlike Long Lake's majority partner and operator, Nexen Inc. (TSX:NXY), Opti didn't have the cushion of other assets to bring in revenue. Calgary-based Nexen is a major offshore producer in the North Sea, Gulf of Mexico and West Africa, and has a large presence in northeastern British Columbia's Horn River Basin.

Nexen shares gained 1.9 per cent, or 44 cents, to $23.21 on the Toronto Stock Exchange.

While Opti was the one calling the shots in its strategic review process, Nexen provided information to bond holders and potential acquirers, said Pierre Alvarez, vice-president of corporate relations.

"I think there was considerable interest over the past 12 months, and at this point we're pleased to see a transaction has been completed and we look forward to CNOOC as a partner," he said.

The Opti board of directors has voted unanimously in favour of the transaction with CNOOC, saying it is in the best interest of the company. The sale is expected to close in the fourth quarter of 2011, pending regulatory approvals in Canada and China.

The threshold for an Investment Canada review is $312 million but it's unlikely that CNOOC's offer wouldn't meet the "net benefit to Canada" test.

Deep pocketed state-owned companies like CNOOC often take a longer view when it comes to investment than others in the private sector that must please shareholders quarter-to-quarter.

CNOOC is likely looking past the short-term hiccups at Long Lake, as its owner -- the Chinese government -- seeks out new sources of energy to support its booming economy decades into the future.

If successful, Wednesday's deal will be China's second-largest oilpatch investment to date, after Sinopec paid $4.65-billion for a nine per cent interest in the world's largest oil sands mine, Syncrude.

Full Article
Source: Huffington 

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