Nexen Inc.
TSX : NXY
NYSE : NXY

Nexen Inc.

September 27, 2010 19:05 ET

Nexen Announces Resource Estimate for Appomattox in the Gulf of Mexico

CALGARY, ALBERTA--(Marketwire - Sept. 27, 2010) - In the first quarter of this year, we made a significant discovery in the deep-water Gulf of Mexico at Appomattox, located in Mississippi Canyon blocks 391 and 392. Drilling activities resulted in an oil discovery with excellent reservoir quality following an exploration well and two appraisal sidetracks. Based on the results of this drilling, our estimate of recoverable contingent resource for this discovery exceeds 250 million barrels of oil equivalent with upside potential. Once drilling resumes in the Gulf of Mexico, we plan to further appraise Appomattox.

Appomattox is the third discovery in the area following earlier discoveries at Shiloh and Vicksburg. Our drilling plans also include further appraisal at Vicksburg which is located six miles east of Appomattox and has the potential to be co-developed. We have a 25% interest in Vicksburg and a 20% interest in Appomattox and Shiloh. Shell Offshore Inc. operates all three discoveries.

"We are excited with the results of the wells drilled to date and Appomattox has the potential to be our best discovery in the Gulf of Mexico so far," commented Marvin Romanow, Nexen's President and CEO. "Once drilling resumes in the Gulf, we will continue appraisal of the field in order to determine ultimate reserves and move towards development plans which potentially include a new hub."

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 focused on three growth strategies: oil sands and unconventional gas in Western Canada and conventional exploration and development primarily in the North Sea, offshore West Africa and deep-water Gulf of Mexico. We add value for shareholders through successful full-cycle oil and gas exploration and development, and leadership in ethics, integrity, governance and environmental stewardship.

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) or "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements or information (together "forward-looking statements") are generally identifiable by the forward-looking terminology used such as "anticipate", "believe", "intend", "plan", "expect", "estimate", "budget", "outlook", "forecast" or other similar words and include statements relating to or associated with individual wells, regions or projects. Any statements as to possible future crude oil, natural gas or chemicals prices; future production levels; future capital expenditures, their timing and their allocation to exploration and development activities; future earnings; future asset acquisitions or dispositions; future sources of funding for our capital program; future debt levels; availability of committed credit facilities; possible commerciality; development plans or capacity expansions; the expectation that we have the ability to substantially grow production at our oilsands facilities through controlled expansions; the expectation of achieving the production design rates from our oilsands facilities; the expectation that our oilsands production facilities continue to develop better and more sustainable practices; the expectation of cheaper and more technologically advanced operations; the expected timing and associated production impact of facilities turnarounds and maintenance;; the expectation that we can continue to operate our offshore exploration, development and production facilities safely and profitably; future ability to execute dispositions of assets or businesses; future sources of liquidity, cash flows and their uses; future drilling of new wells; ultimate recoverability of current and long-term assets; ultimate recoverability of reserves or resources; expected finding and development costs; expected operating costs; future cost recovery oil revenues from our Yemen operations; future demand for chemicals products; estimates on a per share basis; future foreign currency exchange rates; future expenditures and future allowances relating to environmental matters; dates by which certain areas will be developed, come on stream, or reach expected operating capacity; and, changes in any of the foregoing are forward-looking statements. Statements relating to "reserves" or "resources" are forward-looking statements, as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated, and can be profitably produced in the future.

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; our ability to explore, develop, produce, upgrade and transport crude oil and natural gas to markets; ultimate effectiveness of design or design modifications to facilities; the results of exploration and development drilling and related activities; the cumulative impact of oilsands development on the environment; the impact of technology on operations and processes and how new complex technology may not perform as expected; the availability of pipeline and global refining capacity; risks inherent to the operation of any large, complex refinery units, especially the integration between production operations and an upgrader facility; availability of third-party bitumen for use in our oilsands production facilities; labour and material shortages; risk related to accidents, blowouts and spills in connection with our offshore exploration, development and production activities, particularly our deepwater activities; direct and indirect risk related to the imposition of moratoriums, suspensions or cancellations on our offshore exploration, development and production operations, particularly our deepwater activities; the impact of severe weather on our offshore exploration, development and production activities, particularly our deepwater activities; the effectiveness and reliability of our technology in harsh and unpredictable environments; risks related to the actions of our agents and contractors; volatility in energy trading markets; foreign-currency exchange rates; economic conditions in the countries and regions in which we carry on business; governmental actions including changes to taxes or royalties, changes in environmental and other laws and regulations including, without limitation, those related to our offshore exploration, development and production activities; renegotiations of contracts; labour and material shortages; the impact of technology on operations and processes; 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 risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are interdependent, and management's future course of action would depend on our assessment of all information at that time.

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. Undue reliance should not be placed on the statements contained herein, which are made as of the date hereof and, except as required by law, Nexen undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement. Readers should also refer to Items 1A and 7A in our 2009 Annual Report on Form 10-K for further discussion of the risk factors.

Cautionary Note to US Investors

In this disclosure, we may refer to "recoverable reserves", "recoverable resources" and "recoverable contingent resources" which are inherently more uncertain than proved reserves or probable 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.

Resources

The resource estimates contained in this news release were made on September 27, 2010 and were prepared by a qualified reserves evaluator. The estimated recoverable contingent resource in this news release reflects our best case estimate of recoverable resources. A "best estimate" is the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual quantities recovered will be greater or less than the best estimate. Those resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will equal or exceed the estimate.

Nexen's estimates of recoverable contingent resources are based on definitions set out in the Canadian Oil and Gas Evaluation Handbook which generally describe contingent resources as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Such contingencies may include, but are not limited to, factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. Specific contingencies precluding these contingent resources being classified as reserves include but are not limited to: future drilling program results, drilling and completions optimization, stakeholder and regulatory approval of future drilling and infrastructure plans, access to required infrastructure, detailed design estimates and near-term development plans, and general uncertainties associated with this stage of evaluation. There is no certainty that it will be commercially viable to produce any portion of these contingent resources. For more information on the risks and uncertainties in deep-water offshore operations refer to the risk factors in Item 1A of our 2009 Annual Report on Form 10-K.

Cautionary statement: In the case of discovered resources or a subcategory of discovered resources other than reserves, there is no certainty that it will be commercially viable to produce any portion of the resources. In the case of undiscovered resources or a subcategory of undiscovered resources, there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Contact Information

  • Michael J. Harris, CA
    Vice President, Investor Relations
    (403) 699-4688
    or
    Lavonne Zdunich, CA
    Manager, Investor Relations
    (403) 699-5821
    or
    Tim Chatten, P.Eng
    Analyst, Investor Relations
    (403) 699-4244
    or
    Pierre Alvarez
    Vice President, Corporate Relations
    (403) 699-5560
    or
    Nexen Inc.
    801 - 7th Ave SW
    Calgary, Alberta, Canada T2P 3P7
    www.nexeninc.com