“Cnooc did a nice job in adding oil reserves at less than $20 a barrel,” said Shi Yan, a Shanghai-based energy analyst at UOB-Kay Hian Ltd. “It's really a good time to buy assets while crude prices are low and energy firms shed values in stock markets.”

And

Nexen's market value has plunged 60 percent from a high of C$43.45 in June 2008 as its prices fell for natural gas, which accounts for about 20 percent of output. Production growth has also been slower than the company expected because of setbacks at projects in Canada's oil sands and North Sea.

Cnooc will add 900 million barrels of oil equivalent reserves at $19.94 per barrel through the deal, according to a document posted to the company's website. Cnooc plans to boost output by as much as 2.7 percent this year to the equivalent of as much as 930,000 barrels of oil a day.

Eoin Treacy's view The attraction of North American oil and gas producers for a Chinese company is reflected not only in the quality of the physical assets but also in the expertise of personnel and work practices that can be adopted by the parent. China has been in the market for Canadian assets for a number of years and this announcement is the latest in a series of successes for their long-term strategy. Additionally, this is another example of Chinese companies successfully acquiring attractive assets at comparatively lows prices which seems to be a feat major Western energy and mining companies seem incapable of.

Natural gas broke out of the three week range on Friday and pushed above the psychological $3 area. A clear downward dynamic would now be required to question medium-term scope for additional upside.

WTI Crude Oil prices rallied impressively over the last four weeks to unwind the short-term oversold condition. Today's downward dynamic, from the region of the 200-day MA capped the advance and it will need to find support above the $80 area if potential for continued higher to lateral ranging is to continue to be given the benefit of the doubt. I last reviewed a number of North American natural gas producers in Comment of the Day on June 19th when most had found at least short-term support in the region of their respective lows.

Over the last month, there has been a significant bifurcation in the performance of various natural gas producers. Anadarko Petroleum (0.52%), Rexx Energy, EOG Resources (0.69%), Gulfport Corp, Noble Energy (1.02%) and Southwestern Energy rallied on consecutive weeks to unwind their respective oversold conditions. As with oil above, they are susceptible to at least some consolidation of recent gains.

Encana (3.86%), Enerplus (7.78%), Apache Corp (0.76%), Canadian Natural Resources (1.4%), Devon Energy (1.28%) and Talisman Energy (2.33%) were slower to react but rallied impressively last week. Sustained moves below their respective lows would be required to question potential for continued upside.

Following an impressive bounce, Chesapeake encountered resistance in the region of $20 two weeks ago and will need to find support above $15 to confirm more than a short-term low.