Calgary-based Nexen Inc. said last week that media reports of a possible breakup or sale of parts of the company are incorrect. The announcement followed reports that hedge funds are pushing for a breakup and an analyst report that a spin off of assets could realize additional value.
"We are not being pressed to sell or break out parts of our business, and we have not received any letters to that effect," said Nexen CEO Charlie Fischer. "I was surprised to read reports in the media that a campaign is under way to break up the company as I would have expected we would be among the first to know.
"Reports that our stock price does not reflect the value of our underlying assets are not news. We have frequently advised our shareholders and the investment community that the full value of our assets is not being recognized by the market and we have disclosed our plans to unlock that value."
The company said its Long Lake oilsands project is scheduled to commence at mid-year and production of premium synthetic crude at a significant cost advantage to competing technologies will ramp up over a 12- to 18-month period after initial start-up of the upgrader. Nexen also said its Buzzard project in the UK North Sea is "world class" and in the Gulf of Mexico it has built value with "an enviable resource base" and plans to create additional value through its deepwater exploration program.
"We expect to grow our net production by between 8% and 10% this year," said Fischer. "We delivered significant production growth and value for our shareholders last year, but we fell short of expectations largely as a result of delays in the ramp-up of Buzzard and in the start-up of Long Lake."
In December Nexen said its capital expenditure budget for 2008 would only be two-thirds of its 2007 budget of C$3.6 billion. The independent producer said it plans to invest C$2.4 billion in value-adding projects, grow net production by between 8% and 10% and generate C$2.9 billion in cash flow in 2008, which would be a decline from the company's 2007 expected cash flow of approximately C$3.4 billion (see NGI, Dec. 10, 2007).
Nexen is listed on the Toronto and New York stock exchanges under the symbol NXY. On the New York exchange shares have traded at $25.25-34.79 over the last 52 weeks. Nexen shares closed at $31.87 on Jan. 11 and were trading $28.46-28.88 late last week.
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