As Canadian Nationalism Dooms Another Merger, Watch Energy Stocks NXY, ECA, TLM & TRP

In another nationalistic move, Canada is blocking the bid by Malaysia based Petroliam Nasional Berhad, otherwise known as Petronas, to acquire Canada based Progress Energy Resources Corp (TSE: PRQ) as apparently it won’t have a “net benefit” to Canada, meaning other Canadian energy stocks like Nexen Inc (NYSE: NXY), which China based CNOOC Limited (NYSE: CEO) is attempting to acquire, and possibly other popular Canadian energy stocks like EnCana Corporation (NYSE: ECA), Talisman Energy (NYSE: TLM) and TransCanada Corporation (NYSE: TRP) that have listings on US stock exchanges could have a bloody opening this morning. Moreover and last Thursday, Canada’s government also blocked BCE Inc.’s (NYSE: BCE) C$3 billion bid for Astral Media, Inc (TSE: ACM.A) saying it would give the former too much power as its already the country’s largest telco and the owner of many TV or radio assets (ACM.A sank 15.94% on Friday) while a month ago, opposition in Quebec killed a C$1.8 billion unsolicited bid for Canadian home-improvement retailer RONA Inc. (TSE: RON) by the Lowe's Companies (NYSE: LOW). Meanwhile and in 2010, BHP Billiton Limited’s (NYSE: BHP) $39 billion bid for Potash Corp./Saskatchewan (NYSE: POT) got blocked. In the of Petronas and Progress Energy Resources (PRQ), they will have 30 days to convince the government to reconsider but the moves already have some trying to refigure out just how much political risk Canadian investments come with over the long term. With that in mind, here is a closer look at Nexen Inc (NXY), EnCana Corporation (ECA), Talisman Energy (TLM) and TransCanada Corporation (TRP) and what to expect when the market opens:

Nexen Inc (NYSE: NXY): Some Are Already Betting the Deal Does Not Go Through

Nexen Inc is an independent global energy company with conventional oil and gas assets, deep-water Gulf of Mexico and offshore West Africa assets and oil sands investments. CNOOC Limited announced that it would acquire Nexen Inc back in July for $27.50 per share (a premium of 61%) and all of the latter's shareholders have apparently approved of the deal. However and on Friday, Nexen Inc fell 1.47% to $25.40 (NXY has a 52 week trading range of $13.63 to $26.21 a share) for a market cap of $13.46 billion plus the stock is up 59.6% since the start of the year but its still down 20.5% over the past five years. However and if Canada found reasons to block a Malaysian firm from buying Progress Energy Resources Corp (PRQ), they probably have plenty of reasons or excuses to block a big Chinese oil company from buying Nexen Inc.

EnCana Corporation (NYSE: ECA) Has Been Named as an Acquisition Target

EnCana Corporation is a North American energy producer active in the USA and Canada whose other operations include the transportation and marketing of natural gas, oil and natural gas liquids (NGLs). On Friday, EnCana Corporation fell 0.29% to $23.91 (ECA has a 52 week trading range of $17.02 to $24.29 a share) for a market cap of $17.60 billion plus the stock is up 29% since the start of the year but down 63.3% over the past five years. As Canada’s third largest natural gas producer and with natural gas prices at near record lows, EnCana Corporation has been mentioned as a possible buyout target and the stock spiked after the Petronas and Progress Energy Resources Corp deal was announced. Moreover, EnCana Corporation also has an attractive portfolio of assets.

Talisman Energy (NYSE: TLM) Was In Disarray When the CNOOC Nexen Inc Deal Was Announced

Talisman Energy is a global, diversified, upstream oil and gas company with three main operating areas being North America, the North Sea and Southeast Asia. Talisman Energy has been mentioned as an acquisition target ever since the CNOOC Limited and Nexen Inc deal was announced because the later was in the same position as Talisman Energy when it was acquired: In disarray. Specifically, Talisman Energy was hit with downgrades and its CEO resigned after the company reported a 72% fall in second quarter net income (Talisman Energy’s new CEO is Hal Kvisle, the former president and CEO of TransCanada Corp.). On Friday, Talisman Energy fell 1.94% to $13.12 (TLM has a 52 week trading range of $9.46 to $15.21 a share) for a market cap of $13.46 billion plus the stock is up 2.9% since the start of the year and down 35.6% over the past five years. 

TransCanada Corporation (NYSE: TRP) Is Fighting the US Government Over the Keystone Pipeline

TransCanada Corporation is a an energy infrastructure company focused on natural gas pipelines, oil pipelines and energy. TransCanada Corporation has become almost a household name in the USA as it’s fighting the US government to get the Keystone Pipeline built but the US government is not the only one trying to block the pipeline. Some Texas landowners are also upset that TransCanada Corporation has not agreed to use American-made steel, is not promising to use local-workers in the construction and won’t guarantee that the oil will stay in the United States. Hence, they have filed dozens of lawsuits threatening further delays. However and given the concerns listed, I would not be so certain that they are the ones really behind the lawsuits and its really the upcoming elections that will finally decide the outcome of the Keystone Pipeline. On Friday, TransCanada Corporation fell 1.60% to $44.25 (TRP has a 52 week trading range of $38.62 to $47.02 a share) for a market cap of $31.15 billion plus the stock is up 1.3% since the start of the year and up 15% over the past five years.

The Bottom Line. Keep an eye on energy stocks Nexen Inc (NXY), EnCana Corporation (ECA), Talisman Energy (TLM) and TransCanada Corporation (TRP) for when the market opens later today and over the coming months – especially if the blocking of the Petronas - Progress Energy Resources Corp (PRQ) leads to the blocking of CNOOC Limited’s (CEO) bid for Nexen Inc.