Canadian Nexen Inc. Announces Investments in North Sea Oil Platforms for 2012

Nexen Inc announces increase in cash flow for 2012 despite flat year-over-year production. Capital investments will be allocated to growth  projects, including the North Sea Platforms.

Marvin Romanow, Nexen’s President and CEO said  “Our budget reflects growing cash flow, on a price-neutral basis, from significant cash margin expansion. We expect this increase in cash flow despite flat year-over-year production, with the start-up of the Usan project more than offsetting the expected cash flow loss from the Masila contract expiry in Yemen. Our capital investment is expected to be in-line with cash flow at current prices and supports the next stage of our action plan to fill the upgrader at Long Lake, ongoing investment in our key conventional growth initiatives, including Usan, Golden Eagle (North Sea) and Appomattox, and continued progress on our shale gas development.”

North Sea Projects
In the UK North Sea, Nexen recently received government approval for the Golden Eagle development, which is expected to produce about 70,000 boe/d (26,000 boe/d net to Nexen) starting approximately three years from now. In 2012 investments between $375 million and $400 million are foreseen here, this represents approximately one third of total project investment. This spending will be primarily directed towards fabrication of the platforms and facilities, with drilling scheduled to start in 2013. Golden Eagle is expected to generate a 10% rate of return with commodity prices at roughly half of current levels. About $200 million investments to sustain production from existing UK assets and approximately $300 million to advance various tie-back projects in the North Sea, including the development of the Rochelle field tie-back to Scott, and additional drilling at Blackbird and Telford.

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Offshore Nieuws Staff  November 30, 2011; Images Nexen Inc.