NXY was recommended by The Prudent Speculator at $15.64 in Investment Digest issue 720, dated June 6, 2012.
“Renewed and elevated concerns about the ability and/or willingness of Chinese national oil company CNOOC Ltd. to surmount the many hurdles involved in completing its acquisition of the Canadian energy concern had us choosing to capture our winnings on Nexen, Inc. (NXY, $25) this morning at prices no lower than $25.20. Those sales included 1,385 NXY shares held in Al Frank’s TPS Portfolio at $25.22. Our initial recommendation of Nexen came 11 months ago at $16.98, so this stock ends up as a very nice winner.
“While we’ve been nervous Nexen holders ever since CNOOC announced plans two month ago to pay $27.50 in cash for each of our NXY shares, a move that immediately ignited nationalistic concerns in Canada and in the U.S., there were several catalysts for today’s decision to exit the position:
“1. Though the Chinese company went to great lengths to ensure that it met the requirement that any deal must provide a ‘net benefit’ to Canada and not just shareholders, worries have been on the rise that additional accommodations on capital spending and employment may be necessary, perhaps causing CNOOC to walk away from or to lower its offer.
“2. The political rhetoric has ramped up in the U.S. with calls for divestiture of offshore leases Nexen holds (generally as a minority partner and not an operator) in the Gulf of Mexico, while the memory of CNOOC’s failed attempt (due to tremendous political pressure) to buy U.S. energy player Unocal in 2005 is hard to forget.
“3. Other much more undervalued names in the energy space have been hit hard over the last couple of weeks, causing us to like the timing of making a swap in our holdings in the sector.”
- John Buckingham, The Prudent Speculator, September 28, 2012