By Andrew Willis
The rebound in private equity couldn’t have come at a better time for Nexen (NXY), as the energy company unloaded $975 million of heavy oil assets.
Nexen got what analysts see as a decent price for a collection of Canadian properties. The buyer is a private Calgary-based company called Northern Blizzard Resources, which is, in turn, an arm of a $9.5 billion Texas-based private equity fund called NGP Energy Capital Management.
Financial buyers such as NGP pulled in their horns over the past two years, as credit markets tightened and the ability to finance large transactions dwindled. Now banks are lending again, bond markets are open, and the private equity funds are stirring. NGP is a 22-year-old fund manager run by veteran oil and gas managers.
Nexen is expected to raise a total of $1.5 billion from asset sales over the next 18 months, as new CEO Marvin Romanov focuses the energy conglomerate’s operations. The next disposition is expected to see Nexen sell its controlling stake in chemicals play Canexus.
In addition to paying down debt, Nexen is expected to bulk up its North American shale gas holding, UBS analyst Matt Donohue said in a report early Thursday.