Nexen Moves Ahead With U.S. Gulf Exploration Efforts

Calgary-based Nexen Inc. will move ahead with plans to restart its exploration program In the Gulf of Mexico now that the moratorium on drilling has been lifted, Nexen reported.

At Knotty Head, Nexen expects an integrated project team will be in place next year to start work on a joint development plan with Hess to move the Pony and Knotty Head discoveries towards sanctioning.

The company’s 2011 drilling program includes six exploration and appraisal wells in the U.S. Gulf. “We have three exciting wells in the deepwater planned at Kakuna, Angel Fire and Cypress. At Appomattox, where our current estimate of gross contingent resource exceeds 250 million boe, we expect to commence appraisal activities early in the year,” Nexen said in a statement.

The company said it has an “exciting exploration and appraisal program” planned for 2011 and anticipates spending approximately 25% of its capital investment program ($600 to $650 million) on drilling 22 prospects. “Success from this program will generate the next wave of new growth opportunities to follow the five major discoveries we already have in the development queue,” Nexen said.

In the North Sea, Nexen will drill the North Uist prospect, west of the Shetland Islands, and the Votna prospect, Nexen’s second well in Norway. These prospects have higher target sizes than Nexen’s typical North Sea targets.

"We are moving a number of our large exploration successes to the development phase with Usan on deck to start delivering step-change cash flow in 2012," said Nexen President and CEO Marvin Romanow. "After this, we look forward to bringing Golden Eagle, Knotty Head, Appomattox and Owowo on-stream."

Offshore West Africa, the Usan development is moving closer to first oil in 2012. With the floating production, storage and offloading vessel (FPSO) nearing completion, Nexen’s capital investment here will be focused on final fabrication and installation of offshore subsea facilities and ongoing development drilling. Further exploration to follow up Nexen's Owowo success is under consideration.

"In the UK North Sea, we plan to sanction the development of our discoveries in the Golden Eagle area. Our current estimate of gross contingent recoverable resource here is 150 million boe or more. We also plan to advance some of our infrastructure tieback projects towards first production including Telford, Blackbird, Rochelle and West Rochelle," Nexen said.



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