UXBRIDGE, UK, Jan. 17, 2013 /CNW/ - Nexen Petroleum U.K. Ltd. announced today that it has received approval from the UK Department of Energy and Climate Change (DECC) to proceed with the Solitaire field development, a project that's expected to produce eight million barrels of oil.
The Solitaire field is located in central North Sea block 14/26a, 2.5 miles northeast of the £2 billion Golden Eagle Area Development, which is currently under construction and will be installed approximately 43 miles from Aberdeen. Production from Solitaire is to be processed at Golden Eagle.
The development plan for Solitaire will comprise one subsea producer well connected to the Golden Eagle Area northern manifold via an umbilical, a production flowline and a gas lift flowline. Detailed design engineering will commence immediately with field installation expected to begin mid-2014. First oil from Solitaire is expected in 2015.
Nexen Petroleum U.K. Ltd. is the operator of both Solitaire and Golden Eagle with a 36.54% working interest in each development. The remaining interests in both developments are held by Maersk Oil North Sea UK Ltd. (31.56%), Suncor Energy UK Ltd. (26.69%) and Edinburgh Oil and Gas Ltd. (5.21%).
Energy Minister John Hayes said: "New projects like Solitaire are central to the continued development of the UK's oil and gas reserves and will play a fundamental role in ensuring we have secure energy supplies throughout the UK. Because this smaller field is close to a large field such as Golden Eagle it can make use of the extensive infrastructure already in place. It is also very pleasing to see that nearly all of this development's spend will be UK-based, securing jobs in the wider supply chain and contributing greatly to the UK economy."
The project's design, construction and operation reflects the results of a comprehensive environmental impact assessment that has also been approved by the DECC.
"Our investment in the Solitaire field further reinforces Nexen's long-term commitment to the UK North Sea," said Archie Kennedy, Managing Director of Nexen Petroleum U.K. Ltd. "Continuous improvement in safety and environmental performance has been built into our project planning. Safe, responsible energy development is our priority."
Nexen continues to explore and appraise the UK North Sea to identify future development opportunities. In the first nine months of 2012, the company's UK-based business produced approximately 215,000 barrels of oil equivalent per day (boe/d), primarily from the Buzzard field (104,000 boe/d net to Nexen). The company currently provides employment for about 2,000 full-time and contract staff at its offices in Uxbridge and Aberdeen and at its offshore facilities.
Nexen Petroleum U.K. Ltd. is a subsidiary of Nexen Inc., an upstream oil and gas company listed on the Toronto and New York stock exchanges under the symbol NXY. Nexen responsibly develops energy resources in some of the world's most significant basins — including the UK North Sea, offshore West Africa, the Gulf of Mexico and Western Canada. Nexen is strategically focused on three businesses: conventional oil and gas, oil sands and shale gas.
Certain statements in this release constitute "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended) or "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements or information (together "forward-looking statements") are generally identifiable by the forward-looking terminology used such as "anticipate", "believe", "intend", "plan", "expect", "estimate", "budget", "outlook", "forecast" or other similar words and include statements relating to or associated with individual wells, regions or projects. Any statements as to: future production levels; future capital expenditures, their timing and their allocation to exploration and development activities; possible commerciality of projects; development plans or capacity expansions; the expected design size of our facilities; the expectation that Nexen can continue to operate offshore exploration, development and production facilities safely and profitably; future drilling of new wells; ultimate recoverability of current and long-term assets; ultimate recoverability of reserves or resources; future expenditures and future allowances relating to environmental matters and our ability to comply with them; dates by which certain areas will be developed, come on stream or reach expected operating capacity; and changes in any of the foregoing are forward-looking statements.
Statements relating to "reserves" or "resources" are forward-looking statements, as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future.
All of the forward-looking statements in this release are qualified by the assumptions that are stated or inherent in such forward-looking statements. Although Nexen believes these assumptions are reasonable based on the information available to us on the date such assumptions were made, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: that Nexen will conduct operations and achieve results of operations as anticipated; that development plans will achieve the expected results; the general continuance of current or, where applicable, assumed industry conditions; the continuation of assumed tax, royalty and regulatory regimes; the accuracy of the estimates of reserve volumes; commodity price and cost assumptions; the continued availability of adequate cash flow and debt and/or equity financing to fund our capital and operating requirements as needed; the ability of the parties to the July 23 2012 Arrangement Agreement to receive, in a timely manner and on satisfactory terms, the necessary regulatory and other third-party approvals, including but not limited to the receipt of applicable foreign investment approval required in the United States and the required approvals from the Government of the People's Republic of China; the ability of the parties to the Arrangement Agreement to satisfy, in a timely manner, the other conditions to the closing of the transaction; other expectations and assumptions concerning the arrangement transaction and the operations and capital expenditure plans of Nexen following completion of the transaction; and, the extent of our liabilities. Nexen believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable, but no assurance can be given that these factors, expectations and assumptions will prove to be correct.
Forward-looking statements are subject to known and unknown risks and uncertainties and other factors, many of which are beyond our control and each of which contributes to the possibility that forward-looking statements will not occur or that actual results, levels of activity and achievements may differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for oil and gas; our ability to explore, develop, produce, upgrade and transport crude oil and natural gas to markets; ultimate effectiveness of design or design modifications to facilities; the results of exploration and development drilling and related activities; the cumulative impact of oil sands development on the environment; the impact of technology on operations and processes and how new complex technology may not perform as expected; the availability of pipeline and global refining capacity; risks inherent to the operations of any large, complex refinery units, especially the integration between production operations and an upgrader facility; availability of third-party bitumen for use in oil sands production facilities; labour and material shortages; risks related to accidents, blowouts and spills in connection with our offshore exploration, development and production activities, particularly our deep-water activities; direct and indirect risks related to the imposition of moratoriums, suspensions or cancellations of offshore exploration, development and production operations, particularly deep-water activities; the impact of severe weather on offshore exploration, development and production activities, particularly our deep-water activities; the effectiveness and reliability of technology in harsh and unpredictable environments; risks related to the actions and financial circumstances of agents and contractors, counterparties and joint venture partners; volatility in energy trading markets; foreign currency exchange rates; economic conditions in the countries and regions in which Nexen carries on business; governmental actions including changes to taxes or royalties, changes in environmental and other laws and regulations including without limitation, those related to offshore exploration, development and production activities; renegotiations of contracts; results of litigation, arbitration or regulatory proceedings; political uncertainty, including actions by terrorists, insurgent or other groups, or other armed conflict, including conflict between states; the possible failure of Nexen and CNOOC Limited to obtain necessary regulatory and other third-party approvals, including those noted above, or to otherwise satisfy the conditions to the completion of the transaction, in a timely manner or at all; if the arrangement transaction is not completed and Nexen continues as an independent entity, there are risks that the announcement of the transaction and the dedication of substantial resources of Nexen to the completion of the transaction could have an impact on Nexen's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and further operations, financial condition and prospects of Nexen; the possible failure of Nexen to comply with the terms of the Arrangement Agreement may result in Nexen being required to pay a fee to CNOOC Limited, the result of which could have a material and adverse effect on Nexen's financial position and results of operations and its ability to fund growth prospects and current operations; and other factors, many of which are beyond our control.
These risks, uncertainties and other factors and their possible impact are discussed more fully in the sections titled "Risk Factors" in Nexen's 2011 Annual Information Form and "Quantitative and Qualitative Disclosures About Market Risk" in the company's 2011 annual MD&A. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are interdependent, and management's future course of action would depend on our assessment of all information at that time. Undue reliance should not be placed on the forward-looking statements contained herein, which are made as of the date hereof as the plans, intentions, assumptions or expectations upon which they are based might not occur or come to fruition. Except as required by applicable securities laws, Nexen undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Included herein is information that may be considered financial outlook and/or future-oriented financial information (FOFI). Its purpose is to indicate the potential results of our intentions and may not be appropriate for other purposes. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
Note to Investors on Reserves and Resources
The reserves estimates in this disclosure were prepared with an effective date of December 31, 2011. The resource estimates were prepared on March 31, 2012. These estimates have been internally prepared by an internal qualified reserves evaluator in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). For more information on this reserves estimate and Nexen's reserves estimation process please refer to the 2011 Annual Information Form. Both the Annual Information Form and news releases are available at www.nexeninc.com and www.sedar.com.
Conversions of gas volumes to boe in these estimates were made on the basis of 1 boe to 6 mcf of natural gas. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Using the forecast prices applied to reserves estimates, the boe conversion ratio based on wellhead value is approximately 30 mcf:1 bbl. Disclosure provided herein in respect of boes may be misleading, particularly if used in isolation.
SOURCE: Nexen Inc.
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