Nexen Inc.
TSX : NXY
NYSE : NXY

Nexen Inc.

January 08, 2007 09:15 ET

Nexen Achieves First Oil From the Buzzard Field

CALGARY, ALBERTA--(CCNMatthews - Jan. 8, 2007) - Nexen announced today that the Buzzard field in the U.K. North Sea commenced production on January 7, 2007. "The Buzzard development is a key component of our North Sea growth strategy that will generate strong economic returns for our shareholders and firmly establish Nexen as a significant competitor in the North Sea," said Charlie Fischer, Nexen's President and CEO. "Buzzard is capable of supplying approximately 10% of the U.K.'s annual forecast oil demand at peak rates and has been eagerly anticipated within Nexen, by the market and by other stakeholders in the U.K."

Buzzard is located in 100 meters of water, approximately 100 kilometers northeast of Aberdeen, Scotland. With gross recoverable reserves of approximately 550 million boe, it is one of the largest oil fields to be discovered and developed in the U.K. North Sea in over a decade. Peak production of 200,000 boe/d (85,000 boe/d net to Nexen) is expected to be achieved during the first half of 2007. To date nine production and five injection wells have been drilled. Buzzard is planned to be developed with 27 production wells and 11 water injection wells. Oil production is shipped to market via the BP operated Forties pipeline system, while gas is exported via the Total operated Frigg gas pipeline system.

"As one of the largest North Sea discoveries in the last decade, the Buzzard field will significantly boost overall U.K. oil production," said Alistair Darling, Secretary of State for Trade and Industry. "The field begins production today and this is good news for the industry and our economy. We know there are still between 15 and 20 billion barrels remaining in the North Sea, and with Buzzard, the U.K. should return to being a net exporter over the next couple of years."

This has been a pan-European achievement with the Buzzard facilities designed by CB&I in London, the jacket structures constructed by Aker Verdal in Norway, the well head deck built by BIFAB in Scotland, the Utilities and Quarters deck built by Heerema Hartlepool in England, the Production Deck built by Dragados in Spain and the pipelines and facility installation completed by Saipem from Italy.

"Completing Buzzard on time and on budget, in just three years from approval of the development by the U.K. government, is a major accomplishment," said Fischer. "Our co-venturers, hundreds of suppliers and contractors, and thousands of people have worked on the project and I'd like to thank each of them for their commitment and hard work."

Nexen has a 43.2% operated working interest in Buzzard. Other co-venturers include Petro-Canada (TSX:PCA) (NYSE:PCZ) (29.9%), BG Group (NYSE:BRG) (LSE:BG) (21.7%) and Edinburgh Oil and Gas (5.2%).

Nexen Inc. is an independent, Canadian-based global energy company, listed on the Toronto and New York stock exchanges under the symbol NXY. We are uniquely positioned for growth in the North Sea, deep-water Gulf of Mexico, the Athabasca oil sands of Alberta, the Middle East and offshore West Africa. We add value for shareholders through successful full-cycle oil and gas exploration and development and leadership in ethics, integrity and environmental protection.

Additional information and photographs of the Buzzard project can be found at www.nexeninc.com/Buzzard.

Forward-Looking Statements

Certain statements in this report constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "intend", "plan", "expect", "estimate", "budget", "outlook" or other similar words, and include statements relating to future production associated with our Coalbed Methane, Aspen, Long Lake, Syncrude, North Sea, West Africa and other projects.

The forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for oil and gas and chemicals products; the ability to explore, develop, produce and transport crude oil and natural gas to markets; the results of exploration and development drilling and related activities; foreign-currency exchange rates; economic conditions in the countries and regions where Nexen carries on business; actions by governmental authorities including increases in taxes, changes in environmental and other laws and regulations; renegotiations of contracts; results of litigation, arbitration or regulatory proceedings; and political uncertainty, including actions by terrorists, insurgent or other groups, or other armed conflict, including conflict between states. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and management's course of action would depend on its assessment of the future considering all information then available. Any statements as to possible future prices, future production levels, future cost recovery oil revenues from our Yemen operations, future capital expenditures and their allocation to exploration and development activities, future asset dispositions, future sources of funding for our capital program, future debt levels, future cash flows, future drilling of new wells, ultimate recoverability of reserves, expected finding and development costs, expected operating costs, future demand for chemicals products, future expenditures and future allowances relating to environmental matters and dates by which certain areas will be developed or will come on-stream, and changes in any of the foregoing are forward-looking statements.

Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity and achievements. Readers should also refer to Items 7 and 7A in our 2005 Annual Report on Form 10-K for further discussion of the risk factors.

Cautionary Note to US Investors - The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to discuss only proved reserves that are supported by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. In this press release, we may refer to "recoverable reserves", "probable reserves" and "recoverable resources" which are inherently more uncertain than proved reserves. These terms are not used in our filings with the SEC. Our reserves and related performance measures represent our working interest before royalties, unless otherwise indicated. Please refer to our Annual Report on Form 10-K available from us or the SEC for further reserve disclosure.

In addition, under SEC regulations, the Syncrude oil sands operations are considered mining activities rather than oil and gas activities. Production, reserves and related measures in this release include results from the Company's share of Syncrude.

Cautionary Note to Canadian Investors - Nexen is required to disclose oil and gas activities under National Instrument 51-101- Standards of Disclosure for Oil and Gas Activities (NI 51-101). However, the Canadian securities regulatory authorities (CSA) have granted us exemptions from certain provisions of NI 51-101 to permit US style disclosure. These exemptions were sought because we are a US Securities and Exchange Commission (SEC) Registrant and our securities regulatory disclosures, including Form 10-K and other related forms, must comply with SEC requirements. Our disclosures may differ from those Canadian companies who have not received similar exemptions under NI 51-101.

Please read the "Special Note to Canadian Investors" in Item 7A in our 2005 Annual Report on Form 10-K, for a summary of the exemption granted by the CSA and the major differences between SEC requirements and NI 51-101. The summary is not intended to be all-inclusive or to convey specific advice. Reserve estimation is highly technical and requires professional collaboration and judgment. The differences between SEC requirements and NI 51-101 may be material.

Our probable reserves disclosure applies the Society of Petroleum Engineers/World Petroleum Council (SPE/WPC) definition for probable reserves. The Canadian Oil and Gas Evaluation Handbook states there should not be a significant difference in estimated probable reserve quantities using the SPE/WPC definition versus NI 51-101.

In this press release, we refer to oil and gas in common units called barrel of oil equivalent (boe). A boe is derived by converting six thousand cubic feet of gas to one barrel of oil (6mcf:1bbl). This conversion may be misleading, particularly if used in isolation, since the 6mcf:1bbl ratio is based on an energy equivalency at the burner tip and does not represent the value equivalency at the well head.

Contact Information

  • For investor related inquiries:
    Sean Noe, P.Eng
    Analyst, Investor Relations
    (403) 699-4494
    or
    Lavonne Zdunich
    Analyst, Investor Relations
    (403) 699-5821
    or
    For media related inquiries:
    Sucharita Sethi
    U.K. External Affairs Manager
    +44 189 520 6422
    or
    Nexen Inc.
    801 - 7th Ave SW
    Calgary, Alberta, Canada T2P 3P7
    Website: www.nexeninc.com