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Nexen Reports Unsuccessful Kakuna Exploration Well

May 7, 2012

CALGARY, May 7, 2012 /PRNewswire/ – Nexen Inc. (TSX: NXY) (NYSE: NXY) today
reported that drilling operations are complete on the Kakuna sub-salt
exploration well on Green Canyon block 504 in the deepwater Gulf of
Mexico. The well did not encounter commercial hydrocarbons, and is now
in the process of being plugged and abandoned.

Kakuna was drilled to a depth of 30,300 feet at a total cost of
approximately $120 million, net to Nexen ($80 million after-tax).

We hold a broad inventory of exploration prospects in the Gulf of
Mexico, including the sub-salt Miocene play in the central Gulf of
Mexico and the Norphlet play surrounding our Appomattox discoveries. We
continue to advance exploration and appraisal work in the Appomattox
area, where we have discovered over 500 million barrels of resource
(115 million net to Nexen) to date.

Our 2012 exploration program includes approximately 15 offshore
exploration and appraisal wells in the UK North Sea, West Africa and
the Gulf of Mexico. We have made major discoveries in each of our
offshore plays in the last few years, including Appomattox (Gulf of
Mexico), Golden Eagle (UK North Sea) and Owowo South B (West Africa).

About Nexen

Nexen Inc. is an independent, Canadian-based global energy company,
listed on the Toronto and New York stock exchanges under the symbol
NXY. Nexen is focused on three growth strategies: oil sands and shale
gas in western Canada and conventional exploration and development
primarily in the North Sea, offshore West Africa and deepwater Gulf of
Mexico. Nexen adds value for shareholders through successful full-cycle
oil and gas exploration and development, and leadership in ethics,
integrity, governance and environmental stewardship.

For more information on our estimates of reserves, please refer to our
2011 Annual Information Form.  For more information on our estimates of
Appomattox resource, please refer to our press release dated April 2,
2012.

Forward-Looking Statements

Certain statements in this Release constitute “forward-looking
statements” (within the meaning of the
United States Private Securities Litigation Reform Act of 1995, as amended) 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 or natural gas
prices; future production levels; future royalties and tax 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 of our projects; development plans
or capacity expansions; the expectation that we have the ability to
substantially grow production at our oil sands facilities through
controlled expansions; the expectation of achieving the production
design rates from our oil sands facilities; the expectation that our
oil sands production facilities continue to develop better and more
sustainable practices; the expectation of cheaper and more
technologically advanced operations; the expected design size of our
facilities; the expected timing and associated production impact of
facility 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; the expectation of our ability to comply with the new
safety and environmental rules enacted in the US at a minimal
incremental cost, and of receiving necessary drilling permits for our
US offshore operations; estimates on a per share basis; future foreign
currency exchange rates; future expenditures and future allowances
relating to environmental matters and our ability to comply with them;
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.

All of the forward-looking statements in this Release are qualified by
the assumptions that are stated or inherent in such forward-looking
statements. Although we believe that these assumptions are reasonable
based on the information available to us on the date such assumptions
were made, this list is not exhaustive of the factors that may affect
any of the forward-looking statements and the reader should not place
an undue reliance on these assumptions and such forward-looking
statements. The key assumptions that have been made in connection with
the forward-looking statements include the following: that we will
conduct our operations and achieve results of operations as
anticipated; that our development plans will achieve the expected
results; the general continuance of current or, where applicable,
assumed industry conditions; the continuation of assumed tax, royalty
and regulatory regimes; the accuracy of the estimates of our reserve
volumes; commodity price and cost assumptions; the continued
availability of adequate cash flow and debt and/or equity financing to
fund our capital and operating requirements as needed; and the extent
of our liabilities. We believe the material factors, expectations and
assumptions reflected in the forward-looking statements are reasonable,
but no assurance can be given that these factors, expectations and
assumptions will prove to be correct.

Forward-looking statements are subject to known and unknown risks and
uncertainties and other factors, many of which are beyond our control
and each of which contributes to the possibility that our
forward-looking statements will not occur or that actual results,
levels of activity and achievements may differ materially from those
expressed or implied by such statements. Such factors include, among
others: market prices for oil and gas; 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 oil sands 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 operations 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 oil sands production
facilities; labour and material shortages; risks related to accidents,
blowouts and spills in connection with our offshore exploration,
development and production activities, particularly our deep-water
activities; direct and indirect risks related to the imposition of
moratoriums, suspensions or cancellations of our offshore exploration,
development and production operations, particularly our deep-water
activities; the impact  of severe weather on our offshore exploration,
development and production activities, particularly our deep-water
activities; the effectiveness and reliability of our technology in
harsh and unpredictable environments; risks related to the actions and
financial circumstances of our agents and contractors, counterparties
and joint venture partners; 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; results of litigation, arbitration or
regulatory proceedings; political uncertainty, including actions by
terrorists, insurgent or other groups, or other armed conflict,
including conflict between states; and other factors, many of which are
beyond our control.

These risks, uncertainties and other factors and their possible impact
are discussed more fully in the sections titled “Risk Factors” in our
2011 Annual Information Form and “Quantitative and Qualitative
Disclosures About Market Risk” in our 2011 annual MD&A. 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 forward-looking statements contained
herein, which are made as of the date hereof as the plans, intentions,
assumptions or expectations upon which they are based might not occur
or come to fruition. Except as required by applicable securities laws,
Nexen undertakes no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Included herein is information that may be
considered financial outlook and/or future-oriented financial
information (FOFI). Its purpose is to indicate the potential results of
our intentions and may not be appropriate for other purposes. The
forward-looking statements contained herein are expressly qualified by
this cautionary statement.

Note to Investors on Reserves and Resources

The reserves estimates in this disclosure were prepared with an
effective date of December 31, 2011.  The resource estimates were
prepared on March 31, 2012.  These estimates have been internally
prepared by an internal qualified reserves evaluator in accordance with
National Instrument 51-101 Standards of Disclosure for Oil and Gas
Activities (“NI 51-101″) and the Canadian Oil and Gas Evaluation
Handbook (“COGE Handbook”). For more information on this reserves
estimate and Nexen’s reserves estimation process please refer to our
2011 Annual Information Form. For more information on our Appomattox
resource estimate please refer to our press release dated April 2,
2012. Both our Annual Information Form and news releases are available
at
www.nexeninc.com and www.sedar.com.

Conversions of gas volumes to boe in these estimates were made on the
basis of 1 boe to 6 mcf of natural gas. A boe conversion ratio of 6
mcf:1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency
at the wellhead. Using the forecast prices applied to our reserves
estimates, the boe conversion ratio based on wellhead value is
approximately 30 mcf:1 bbl. Disclosure provided herein in respect of
boes may be misleading, particularly if used in isolation.

SOURCE Nexen Inc.


Source: PR Newswire