Nexen gives go-ahead for Golden Eagle

Offshore staff

CALGARY, Canada -- Nexen’s board has approved development plans for the Golden Eagle project in the UK central North Sea.

This will involve installation of two platforms with production capacity of around 70,000 boe/d. Nexen is operator with a 36.5% working interest. Assuming partner and regulatory approval, project sanction is expected in mid-year, leading to first oil in late 2014.

“Golden Eagle is the largest oil discovery in the North Sea since Buzzard,” said Marvin Romanow, chairman and CEO. “This project is economically attractive at oil prices much lower than today.”

The development cost is estimated at $3.3 billion, with Nexen’s share at around $1.2 billion.

The investment remains attractive, Romanow said, despite the recent decision by the UK government to increase the tax rate levied on oil and gas activities.

“While I believe the government’s decision to increase taxes will discourage new investment, our near-term plans for the UK North Sea remain robust due to the size and quality of our discoveries.

“We also have a competitive advantage because of the extensive infrastructure and resources that we have in the region. We have successfully developed other large projects in the North Sea and this experience gives us confidence the project can be completed on schedule and on budget.”

Elsewhere in the UK offshore sector, Nexen is progressing two tieback projects, Telford and Blackbird, both on track to deliver increased production this year. Those projects, combined with the recently approved Rochelle field development, should provide the company with a further 10,000 to 20,000 boe/d net by end-2012.

The company also plans further drilling north of Golden Eagle, completion of an appraisal of the Polecat discovery, and drilling of numerous other exploration prospects.

04/27/2011

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