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Nexen Announces Continued Progress On Strategic Initiatives & Solid Second Quarter Results

CALGARY, Alberta, July 19, 2012 /PRNewswire/ --

- Performance at Buzzard & Usan Drives Increased Production and Cash Flow

Nexen Inc. (TSX: NXY) (NYSE: NXY) today reported second quarter 2012 operating and financial results and provided an update on strategic priorities.

Production volumes averaged 213,000 barrels of oil equivalent per day (boe/d), a 5% increase from the first quarter. These volumes reflected the ramp-up of our Usan project offshore West Africa and solid performance from our UK assets, in particular the Buzzard platform. Cash flow from operations was up 6% to $707 million ( $1.34/share) as we recognized the first cash flow from Usan and continued to benefit from our exposure to Brent-priced oil and strong cash netbacks. Net income decreased 36% from the prior quarter to $109 million ( $0.20/share) primarily due to the previously announced unsuccessful Kakuna exploration well in the Gulf of Mexico.

We continue to make good progress on several of our strategic priorities:
  • Buzzard operations were very strong; the facility produced 194,000 boe/d (84,000 boe/d net to Nexen) with a production efficiency of 88%, which exceeded our target of 85%.
  • Usan continues to ramp-up and is currently producing over 100,000 barrels per day (bbls/d) (20,000 bbls/d net to Nexen) from the initial production wells.
  • In the Gulf of Mexico, we continue to be excited by our success at Appomattox. We recently completed a successful appraisal well in the south fault block of the structure and the preliminary indications are that we are near the upper end of our expectations. Next, we plan on drilling a sidetrack to test additional resource potential in the northwest fault block.
  • We also continue to progress our exploration program elsewhere, with drilling operations underway on the North Uist well in the UK North Sea and the Owowo West well, offshore West Africa.
  • We achieved first production from pad 12 at Long Lake and began steaming pad 13 ahead of expectations; these pads are expected to produce 11,000-17,000 bbls/d of gross bitumen production following an 18 to 24 month ramp-up.

"I'm pleased that we continue to make significant progress against our milestones and that we've generated solid financial results over the past few quarters," said Kevin Reinhart, Nexen's interim President & CEO. "A renewed focus on operational excellence has allowed us to meet our production guidance again this quarter, and our growth plans are also advancing, with important progress at Long Lake, ongoing success at Appomattox and a couple of exciting exploration wells underway."

Operational Update

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