The credit crunch may bring cash-rich Canadian oil producer Nexen Inc acquisition opportunities, the company's chief financial officer said on October 02. Marvin Romanow said Nexen is unlikely to suffer from the current crisis that has frozen global capital markets and toppled Wall Street banks.
-- Nexen sees acquisition opportunities from crisis
-- Company slowed stock repurchase program, CFO says
-- Nexen says now carrying cash, no need to borrow
"We might have some opportunity to take advantage," the CFO told Reuters in an interview. "We will have choices as opportunities present themselves." High oil prices have left Canada's No 4 independent oil producer flush with cash, Romanow said. Nexen has available bank lines, decades before its outstanding bonds come due and no plans to look for more capital.
"We are carrying cash now," he said. "We're fortunate that our capital needs are dropping down a bit and oil prices are strong." Nexen's major capital projects like construction of its Buzzard oil field facilities in the North Sea and the first, $6.1 billion stage, of its Long Lake oil sands project are behind it and now generating cash instead of absorbing it.
Now the company may look to expand its operations if an opportunity presents itself.
"We have solid businesses in the North Sea and the oil sands and we are ramping up our capital ... in the shale gas area. Those are the kind of places where we may have some choices going forward."
However Nexen stock, like its peers, has been hit as investors flee energy issues because of falling oil prices and the uncertainty over the proposed $700 billion US bailout package.
Nexen shares fell C$1.40 to C$23.30 on the Toronto Stock Exchange on October 02. Since the end of August the shares have fallen 30 percent, double the 15 percent drop in the exchange's broader composite index over the same period.
Still, while some observers have called for companies in the Canadian energy sector to boost share repurchases to signal continued faith in their prospects, Romanow said Nexen recently slowed its repurchases to conserve cash.
"As we moved into this financial uncertainty it seemed there would be a high value to having some cash around," he said. "When the crisis started to emerge, the more we watched it the more we saw that people weren't trading stocks on their value. So we did not stop our buybacks but we slowed them down a bit."