Tuesday, January 4, 2011

Nexen Inc. (NXY) - Horn River Basin Update

By Andrea: http://oilshalegas.com

During the third quarter, Nexen Inc.(NXY) completed a 144 frac program on their eight-well pad in the Horn River at an industry-leading pace of 3.5 fracs per day with a 100% frac success rate. Earlier this year, they completed their drilling campaign here at an average rate of under 25 days per well. Compared to their previous program, these wells were drilled in 35% fewer days and were 80% longer. They recently started production testing these wells and expect to reach peak production rates of 50 mmcf/d this winter. They plan to follow up this successful program with a nine well pad that would start drilling this winter. The wells would be fraced and completed next summer with first production in the fourth quarter of 2011. This allows them to advance their Horn River play while they progress their plans for an 18-well pad to be drilled next winter with first production expected in late 2012.

"Our performance in the Horn River continues to be top quartile with the successful execution of our drilling and frac strategies. This type of execution will lead to higher returns on this business," commented Romanow. "This play is expected to earn a ten percent rate of return with gas prices at US$4/mcf."

Nexen has approximately 90,000 acres at Dilly Creek in the Horn River basin. As previously announced, their Dilly Creek lands contain between 3 and 6 trillion cubic feet (0.5 to 1.0 billion barrels of oil equivalent) of recoverable contingent resource, assuming a 20% recovery factor. Following their success at a June land sale, they now have over 300,000 acres of highly prospective shale gas lands in the Horn River, Cordova and Liard basins in northeast British Columbia.

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