Nexen to Sell Heavy Oil Assets – Analyst Blog

Nexen Inc. (NXY) intends to sell non-core heavy oil properties in Western Canada to Northern Blizzard Resources Inc. The consideration for this transaction is approximately $975 million, before some adjustments.

 

The properties in the question had proved reserves of 39 million barrels of oil equivalent (BOE) and produced an average of 16.1 thousand barrels of oil equivalent (MBOE/d) in the last four quarters. The deal expected to close at the end of the next month.

 

Following the sale, Nexen still expects to meet its original 2010 production guidance of 230 MBOE/d to 280 MBOE/d (before royalties) despite the sale.

 

Nexen expects to generate over $1.5 billion in total proceeds and net debt reduction from all asset dispositions, once it completes the expected sale of its interest in Canexus Income Fund over the next 12 to 18 months.

 

The company is moving forward with the development of several major identified projects including Usan in offshore Nigeria, Golden Eagle in the UK North Sea, Horn River shale gas in British Columbia and Long Lake in Canada.

 

With increased production volumes, Long Lake has shown recent signs of improvement in terms of reliability and production performance. We believe that the divestiture will support the company to accentuate its development program at Horn River and Long Lake.