OPTI Canada Inc. has entered into an agreement with CNOOC Luxembourg S.à r.l, an indirect wholly-owned subsidiary of CNOOC Limited, pursuant to which indirect wholly-owned subsidiaries of CNOOC Limited, will acquire the Second Lien Notes and all of the outstanding shares of OPTI.

The total value of the Transaction is approximately US$2.1 billion, which includes net consideration of US$1,179 million payable to holders of OPTI's Second Lien Notes, US$37.5 million payable to backstop parties, US$34 million payable to shareholders and the assumption of US$825 million First Lien Notes. CNOOC Limited is China's largest producer of offshore crude oil and natural gas and one of the largest independent oil and gas exploration and production companies in the world.

Pursuant to the terms of the Arrangement Agreement, CNOOC Limited, through its subsidiaries, will:

acquire OPTI's US$1 billion 8.25 percent Senior Secured Notes due 2014 and US$750 million 7.875 percent Senior Secured Notes due 2014 (collectively, the "Second Lien Notes") for a net cash payment of US$1,179 million; acquire all existing issued and outstanding common shares of OPTI for a cash payment of US$34 million equal to US$0.12 per common share; and assume, in accordance with the notes' indentures, the Company's US$300 million 9.75 percent First Lien Notes due 2013 and its US$525 million 9.00 percent First Lien Notes due 2012 (collectively, the "First Lien Notes").

The Board of Directors of OPTI has determined that the Transaction is in the best interest of the Company and voted unanimously in favour of the Transaction.

Chris Slubicki, President and Chief Executive Officer of OPTI stated, "We are very pleased with this transaction and believe it is in OPTI's best interest. CNOOC Limited is a technically experienced and well-capitalized company that is equipped to support further development at Long Lake and future expansions in the Canadian oil sands."

Mr. Yang Hua, Chief Executive Officer of CNOOC Limited commented, "The transaction strengthens our Canadian presence in the oil sands business. We believe that upside potential of the assets will facilitate local energy supply and our production growth in the long term."

The Transaction is subject to approval by a majority in number, representing at least 66 2/3 percent of the principal amount, of votes cast by the holders of the Company's Second Lien Notes. OPTI has received executed support agreements (the "Support Agreements") from holders of approximately 55 percent of the principal amount of the Second Lien Notes pursuant to which they have agreed to vote in favour of the Transaction. If the Transaction is terminated, other than pursuant to a Superior Proposal, the parties to the Support Agreements have agreed, in certain circumstances, to pursue the restructuring plan outlined in the Company's press release dated July 13, 2011. The Noteholder Meeting regarding these matters is expected to occur in September 2011.

The Transaction is subject to certain terms and conditions including, among other things, applicable government and regulatory approvals by relevant authorities in Canada and the People's Republic of China, and Alberta court approval. The Transaction is expected to close in the fourth quarter of 2011. It is expected that the Transaction will not be subject to a vote of the shareholders of OPTI.

The Transaction will be effected by way of a plan of arrangement through concurrent proceedings under the Companies' Creditors Arrangement Act (the "CCAA") and the Canada Business Corporations Act. All of OPTI's trade creditors and its project operator, Nexen Inc., will be paid in the ordinary course.

Scotia Waterous Inc. and TD Securities Inc. are acting as financial advisors to OPTI on the Transaction and Macleod Dixon LLP is acting as legal advisor to OPTI on the Transaction and in connection with the restructuring. Lazard Frères & Co. is acting as advisor to OPTI in connection with the restructuring. The Supporting Noteholders are being advised by Canaccord Genuity Corp. and Bennett Jones LLP.

Tags: CNOOC Limited, OPTI Canada Inc.