One of the interesting news announcements this week, was about CNOOC of China buying Nexen of Canada – an energy exploration company. CNOOC is a $38 billion company and Nexen reported revenues of $6.3 billion in 2011.
For any company looking at global markets, there are some interesting developments wrapped up in this announcement.
This is a major step for a Chinese company, a major step in the energy industry and a major step for Canada. Consider a few facts compiled from our Global 5000 database.
- Canada’s energy assets are substantial. Looking at Global 5000 companies in Canada, right behind Financial Services, Oil & Gas and Mining are the next 2 largest industries representing 27% of the largest companies in Canada. So, as the world thirst for natural resources and energy continues to climb … Canada will get more attention.
- Looking at growth rates over the past few years, China has grown faster than the rest of the market. So has the Oil & Gas industry as well as the Mining industry. The total Global 5000 grew 11.4% in 2010 and 12% in 2011. China based Global 5000 companies grew 33.5% and 30% in 2011. Oil & Gas firms reported growth of 22% and 24% for those same years while mining companies grew even more at 40% in 2010 and 30% this past year. So, this deal hits right at the heart of a number of growth segments.
- This is a second big deal by a Chinese company in the North American market — see our article earlier this year on the Chinese bank ICBC entering the US market via an acquisition.
The bottom line here is that China’s economy is huge, its growth — even at lower rates — is still a huge differential and it has a continually increasing need for energy resources. Canadian companies have those resources so we can expect more deals and activity.