Driven by net-back growth in its deepwater Gulf of Mexico (GOM) operations, Calgary-based independent Nexen Inc. on Thursday reported a year-over-year 3% increase in third production.

Worldwide, Nexen’s production after royalties was 188 MMboe/d, up from a year earlier but lower than its second quarter number of 195 MMboe/d. In the United States, production after royalties was 48 MMboe/d, and in Canada, the company’s quarterly production was 56 MMboe/d. Overall, natural gas averaged 299 MMcf/d, or 249 MMcf/d after royalties.

CEO Charlie Fischer said the numbers were “in line with our expectations.” He noted that the sequential decrease in Canada’s quarterly production resulted from the company’s sale in August of some light oil properties in Saskatchewan, which were producing 9,000 boe/d (7,000 net). U.S. production sequentially was affected by a 37-day shut-in of 25 MMcf/d at Eugene Island 295 in the GOM, when permanent production facilities were installed to replace temporary ones that were put in following Hurricane Lili last year.

Fischer said Nexen’s deepwater GOM operations were driving a growth in net-backs. In the GOM, “Aspens’s low-cost structure results in margins that are about twice our corporate average and Gunnison, on stream in about three months, will contribute additional high-margin volumes. The deepwater GOM is a great place to continue growing our business,” he said.

Nexen is forecasting it will grow its production more than 5% this year, with an average rate of nearly 190,000 boe/d after royalties. Cash flow is expected to reach about C$1.8 billion, or C$14 a share, assuming oil prices after US$27/bbl and gas prices average US$4.50/Mcf.

“The coming months will be exciting ones at Nexen,” said Fischer. “We’ll drill major exploration wells in the GOM, Yemen and offshore West Africa. We’ll delineate our recent discoveries in Yemen, finalize plans to proceed with commercial development of Long Lake and Block 222, and commence production at Gunnison.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.