Nexen reveals 2011 Corporate Strategy; Projected 7% production growth in 2011; Stick to three primary growth strategies – conventional offshore, oil sands and shale gas

Nexen prioritizes its 2011 activities that include a continued ramp up of Long Lake, completing the development of Usan discovery with first oil production in 2012, sanctioning discoveries, proceeding with the development of Horn River shale gas lands, securing a contract extension in Yemen and continuing with the implementation of the exciting global exploration program.

The company expects 2011 production volumes to range between 230–270 kboepd, before royalties and capital expenditure budget ranges between $2.4–2.7 billion.

Nexen’s diversified portfolio of exploration and production (E&P) assets provides the company with a multi-year inventory of development projects and a positive long-term production growth profile. It plans to deploy nearly 25% of total 2011 capital budget for the E&P program.

Nexen is primarily focused in the North Sea, deepwater Gulf of Mexico & offshore West Africa. The company projected 7% production growth in 2011.

Recently, Nexen initiated a process to seek a joint venture partner for various portions of the company’s northeast British Columbia shale gas acreage.

Source: Derrick E&P Transactions Database

Traffic towards Marcellus is high!! Seneca Resources divests GoM assets and focuses on Marcellus assets

Seneca Resources agreed to sell its Gulf of Mexico oil and natural gas producing properties for $70 million.

David F. Smith, Chairman and Chief Executive Officer of Seneca says, “We look forward to redeploying these proceeds to Seneca’s long-term growth opportunities in the Marcellus Shale. While our well costs have increased as a result of additional frac stages and increased service company charges, this has been offset by higher anticipated estimated ultimate recovery (EUR) factors. We are now anticipating well costs of $5.0 - $6.4 million for wells with up to 20 frac stages and lateral lengths reaching over 6,000 feet. Taking these factors into account, we expect to see results continue to improve over time, with some of our best wells achieving EURs of 8 Bcf. At a natural gas price of $4.00 per MMBtu, the pre-tax internal rates of return are still exceptional, ranging from 20 percent to better than 65 percent.”

As a result of the above, Seneca’s capital spending in the Exploration and Production segment for fiscal 2011 is now expected to be in the range of $600 to $655 million, up from the previously announced range of $485 to $560 million.

Traffic towards Marcellus!!!

There has been a vigorous traffic towards Marcellus area in 2010 with around $17 billion worth transactions as against ~$1.4 billion worth transactions in 2009. Huge difference!!!

In 2009.... 

In 2010....

Seneca’s divestiture of GoM assets and focus on Marcellus is in a way similar to the recent Range’s divestiture of Barnett assets and diversion of maximum capital towards Marcellus. Read more on the Range deal: http://mergersandacquisitionreviewcom.blogspot.com/2011/03/range-drops-barnett-for-900-million-and.html.

Also, Bob Ramsey, an analyst at FBR Capital said, "Marcellus Shale gas will bring an estimated $250 billion in payments to Pennsylvania land owners (more than four times the entire state's deposits) and drive $8 billion to $15 billion of annual spending in the state, based on 2,000 to 3,000 wells drilled per year.”

See more publications on Marcellus: http://docsearch.derrickpetroleum.com/research/q/Marcellus.html