Shell, Nexen Boost Resource Base at Appomattox

Royal Dutch Shell
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Nexen Inc. announced completion of the evaluation of its recent drilling success on the northeast fault block of the Appomattox structure. The company demonstrated contingent recoverable resource in the northeast block of approximately 215 MMboe (50 MMboe net to Nexen), with a range of 120 to 370 MMboe (25 to 90 MMboe net to Nexen) of light oil. Future planned appraisal drilling will further refine this range. Nexen holds a 20% interest in Appomattox and a 25% interest in Vicksburg and various other blocks in the area; Shell Gulf of Mexico Inc. (Shell) holds the remaining interest and is operator.

The Appomattox structure is comprised of three large fault blocks. The initial discovery well in 2010 was located in the south fault block. In 2011, the company booked 65 MMboe net (325 MMboe gross) of probable reserves from this fault block. The newly discovered resource in the northeast fault block is in addition to these probable reserves. The 2007 Vicksburg discovery is located about 5 miles to the east.

Nexen and operator Shell plan to conduct additional exploration and appraisal activity in the Appomattox area during 2012 and extending into 2013. Nexen is currently drilling an appraisal well in the south fault block to further define the existing resource. From that well, the company plans to sidetrack into the northwest fault block to test another major part of the Appomattox structure. Following this, Nexen expects to drill an exploration well on a structure located between Appomattox and Vicksburg, and a subsequent sidetrack to further appraise the northeast fault block discovery.

Concurrent with the company's appraisal program, the company is evaluating development concepts and scenarios that could result in project development sanction in 2014. The current discovered resource has hub potential with production capacity of more than 100,000 barrels of oil equivalent per day.

"This is an exciting discovery for Nexen," said Kevin Reinhart, interim President and CEO. "It enhances our resource base at Appomattox and builds our confidence in finding more oil in our significant Gulf of Mexico Norphlet play acreage position. Our Appomattox area discoveries complement our previous exploration successes at Rochelle, West Rochelle and Golden Eagle in the North Sea, Knotty Head in the Gulf of Mexico and Owowo South offshore West Africa. These discoveries are all in various stages of progress."


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