Canada's Nexen to sell stake in chemical producer Canexus

09 December 2009 19:11  [Source: ICIS news]

TORONTO (ICIS news)--Nexen plans to sell its majority stake in sodium chlorate and chlor-alkali producer Canexus, the Canadian oil and gas firm said on Wednesday.

The sale would take place in the next 12 to 24 months, with “timing dependent on appropriate market conditions,” chief executive Marvin Romanow told analysts during a conference call.

Nexen hived off its chemical business in 2005 into Canexus, a listed Canadian income trust in which it retained a majority.

Canexus, with plants in Canada and Brazil, had sales of Canadian dollar (C$) 115m ($109m) for the third quarter ended 30 September, up 5.2% sequentially from the second quarter. It gross margin was 32% in both quarters.

Nexen would likely use proceeds from the Canexus stake and other assets disposals, estimated to exceed C$1bn in total over the next 24 months, to invest in oil sands projects in Canada, as well as shale gas drilling and oil exploration in other regions, Romanow said.

“The oil space is a very good place to be for the foreseeable future, with the substantial premium that oil trades, relative to natural gas, today,” he added.

Canexus’s units were priced up 3% at C$ 5.45/unit in Wednesday afternoon trading on the Toronto stock exchange. This compares with a price of C$10/unit in 2005 when Nexen started spinning off Canexus.

($1 = C$1.05)

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