The search is on for a new chief at Nexen Inc. after President and CEO Marvin Romanow resigned on Monday.

Nexen CFO Kevin Reinhart has been appointed interim president and CEO while a search for a new leader is conducted, the Calgary-based company said. Romanow, 55, was promoted to lead Nexen in late 2008 (see Daily GPI, Dec. 12, 2008).

“Marvin has made a valuable contribution to Nexen during his 13 years with the company,” said Nexen Chairman Francis Saville. “Kevin has been with the company for over 17 years and he has the full support of the board in his new role.”

Nexen’s share price has fallen more than 20% in the past year. Tuesday the company rallied on the New York Stock Exchange by more than 8% and ended the day at $18.09.

“Nexen is a strong company with a high quality suite of assets,” said Saville. “We are committed to closing the value gap for our shareholders through execution of our oilsands, conventional offshore and unconventional gas strategies as outlined at the company’s investor day in early December.”

Nexen, whose portfolio is spread across North America and overseas, said at its investor presentation late last year that it had projects planned this year in North America’s onshore and in the Gulf of Mexico (see Daily GPI, Nov. 30, 2011).

Nexen, which has about 300,000 net acres in northeastern British Columbia, late last year sold a 40% stake in the properties to a consortium led by Japan’s Inpex Corp. The partnership, in which Nexen would remain the operator, is to develop unconventional gas-weighted lands in the Horn River, Cordova and Liard basins. Nexen doubled its holdings in the area in 2010 (see Daily GPI, July 16, 2010) and Romanow said early last year that Nexen was looking for a partner.

The Calgary-based independent is forecasting 2012 natural gas and oil production to be 185,000-220,000 boe/d, largely flat compared with 2011 but with expanding cash margins. Capital spending worldwide is expected to be C$2.7-3.2 billion, with cash flow between C$2.8 billion and C$3.3 billion assuming current prices, or C$5.30-6.30/share.

The shakeup apparently will send a signal to the markets that management is accountable for performance. Calgary-based FirstEnergy Capital Corp. analyst Mike Dunn said in a note that Nexen management has failed, among other things, to hit production targets at the Long Lake oilsands project. Gary Nieuwenburg, executive vice president, who had managed the Long Lake project, also resigned Monday.

“It’s safe to assume that continued disappointments there played a role in these departures,” said Dunn, who noted that he had spoken to Nexen’s management about the changes.

Canaccord Genuity analysts, led by Phil Skolnick, said they expected the stock to “react very positively” to the news given the company’s history of operational disappointments. “We see the change as being good for the company, especially as it tries to fix its discount valuation,” said Skolnick. “But after the immediate excitement settles, we believe there will be a pause period in the share price as investors wait to see who comes in as the new CEO and what the strategy will be.”

Some may think Nexen’s news is a sign the company is for sale, but Canaccord’s team doesn’t agree.

“We believe the board is committed to executing the strategy laid out at its recent investor day to deliver improved results (including improved operations at Long Lake), meet expectations, and close the valuation gap, and this is a move to try to get there,” said the Canaccord analysts. “Nevertheless, we reiterate our view that it will take time to fully steer the company around, and that ultimately stock performance will be contingent on operational performance, of which a key component continues to be Long Lake.”

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