Alberta-based Nexen Inc. (NXY) is well-positioned for a solid growth as it continues with major developments in the U.K. North Sea, announcing the discovery of substantial additional resource and the start-up of new production.

Following the successful development of the Buzzard project in 2007, Nexen’s Golden Eagle area in the U.K. North Sea is shaping up to be a significant development project for the company.

Nexen is currently evaluating development options in the Golden Eagle area as the company expects to continue appraisal drilling in the area for the remainder of the year. The Golden Eagle area contains 150 million to 275 million barrels of oil equivalent of gross recoverable contingent resource.

Nexen recently completed a new step-out development well in the Scott/Telford development area in the North Sea. The well encountered 254 feet of high quality net oil pay. The company has a 72% working interest in the field.

Nexen’s diversified portfolio of exploration and production (E&P) assets includes high-impact exploration prospects in the U.S. Gulf of Mexico, offshore West Africa and the North Sea, stable operations in Yemen and an attractive unconventional resource base in Canada. This provides the company with a multi-year inventory of development projects and a positive long-term production-growth profile.

With these positives already reflected in the current valuation following the stock’s recent strong run-up (up more than 60% in the last six months), we are maintaining our Neutral rating on Nexen shares.
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