Nexen Says Production at Eugene Is. 295 Down for 12 Months

Nexen Inc. says that a detailed inspection of its Eugene Island 295 field infrastructure following Hurricane Lili has revealed extensive damage to the production platform. Production from Eugene Island 295 is not expected to be restored for up to 12 months.

Nexen had an exploitation program in progress at the time of the storm. New compression was installed and recently we successfully drilled and completed the A-25 well, one of a number of low-risk opportunities we had identified since acquiring this field last year. Eugene Island 295 was producing 7 million cubic feet of gas per day at the time production was shut-in for Hurricane Lili. The installed compression facilities and new well productivity would have brought current production to approximately 26 mmcf per day. Additional development activity has been deferred pending completion of a remediation plan.

"With the exception of Eugene Island 295, all of the damage from Lili has been repaired and our current production from the Gulf of Mexico is approximately 28,000 equivalent barrels per day," commented Charlie Fischer, Nexen's President and Chief Executive Officer. "We are working with our insurers to resolve business interruption, which should replace lost cash flow, and our property damage claims."