Nexen revels in Gulf of Mexico

Gary Park, Petroleum News Calgary correspondent

Investments in the U.S. Gulf of Mexico are starting to generate a handsome payoff for Canadian independent Nexen, after two years of buying BP assets and entering joint ventures with Shell.

“Our operations at Aspen in the deepwater of the Gulf of Mexico are having a dramatic impact on our financial results,” said President and Chief Executive Officer Charlie Fischer in Nexen’s second-quarter financial results.

He said margins at Aspen are more than double the company’s average and cash flow from Aspen’s 27,000 barrels of oil equivalent per day are equivalent to 58,000 barrels per day from other operations.

The gulf is now “our strongest cash contributor and will grow further with the addition of high margin volumes from our Gunnison project” which is likely to come on stream early in 2004 at 2,000 bpd of oil and 50 million cubic feet of gas, Fischer said.

Nexen’s global production before royalties averaged 280,000 boepd in the second quarter, up from 264,000 boepd, with the Gulf jumping to 57,000 boepd from 44,000 boepd. Yemen remained the top producer at 119,000 boepd.

Fischer has rated the gulf as one of the world’s best basins to explore, rating the deepwater as being on a par with the shelf in the mid-1960s in terms of maturity.