December 12, 2008

Nexen cuts capital spending and delays upgrader project

CALGARY

Nexen Inc. is cutting capital spending on oil and gas projects by about 15 per cent to $2.6 billion next year, but the major energy company plans to boost production by about 10 per cent.

In a statement, Nexen set its 2009 capital expenditures budget at $2.6 billion, down from the estimated $3 billion the company is spending this year.

In mid 2008, Nexen announced it would raise capital spending from planned earlier levels.

The Calgary-based company, the subject of takeover rumours in recent months, said it plans to boost net production to between 220,000 and 235,000 barrels of oil equivalent output a day.

Nexen and other players in the Western Canadian oil patch have been cutting planned spending in 2009 because of plunging energy prices and the global economic and financial crisis that has made it more difficult to raise money for expansion projects.

Nexen has decided to delay or postpone construction of a new refinery upgrader for its oil sands unit because costs are too high in the current economic environment.

“Our 2009 capital investment program will allow us to meet our commitments, pursue our strategic opportunities and preserve our liquidity,” said Marvin Romanow, Nexen’s chief financial officer and incoming chief executive.

“We are well positioned to pursue the opportunities in our attractive portfolio without compromising our financial position and we have choices to adjust our capital investment as the economic environment unfolds.”

Also this week, the biggest partner in the Syncrude oilsands project in northern Alberta, Canadian Oil Sands Trust said it plans $440 million in capital expenditures in 2009 and daily average production of 115,800 barrels of synthetic oil per day.

In addition to Canadian Oil Sands, the Syncrude joint venture includes Imperial Oil Ltd. Petro-Canada, Nexen Inc., ConcoPhillips, Mocal Energy Ltd. and Murphy Oil Company Ltd.

Canadian Press

Print | Email | Comment