) third-quarter 2012 income from continuing operations of 11
Canadian cents (11 US cents per share) missed the Zacks Consensus
Estimate of 20 US cents as well as 32 Canadian cents (33 US
cents) posted in the year-earlier quarter. The decrease in
earnings was mainly due to low oil and gas price realizations in
the reported quarter.
CNOOC LTD ADR (CEO): Free Stock Analysis
NEXEN INC (NXY): Free Stock Analysis Report
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Total revenue fell 1% to C$1,509 million (US$1,515.3 million)
from the year-earlier level of C$1,524 million (US$1,558.1
million). However, the quarter's revenue surpassed the Zacks
Consensus Estimate of US $1,414 million.
During the third quarter, production before royalties averaged
181 thousand barrels of oil equivalent per day/MBOE/d (172MBOE/d
net of royalties). Production before royalties decreased 2.7%
year over year, and on a net-of-royalty basis, it grew 4.9%.
The year-over-year decrease in production before royalties was
mainly due to the scheduled downtime related to the turnarounds
at Buzzard platform, Long Lake and Scott.
Nexen's average oil price realization was $103.43 per barrel in
the third quarter, down 0.5% year over year. Natural gas average
price realization was C$3.19 per thousand cubic feet (Mcf), down
26.8% year over year.
Nexen spent C$831 million (US$834.5 million) on capital programs
during the quarter. As of September 30, 2012, the company had
C$1,870 million (US$1,900.7 million) in cash and C$4,237 million
(US$4,306.5 million) in long-term debt, with a
debt-to-capitalization ratio of 32.4% (up from 33.2% in the
Nexen has maintained its 2012 full-year output (before royalties)
projection of 185−220 MBOE/d, while it has decreased its
production goal for the fourth quarter to 180-200 MBOE/d from the
earlier range of 205-240 MBOE/d.
Calgary, Alberta-based Nexen operates in western Canada, the Gulf
of Mexico, North Sea, Africa and the Middle East, and has its
biggest reserves in the Canadian oil sands. Apart from oil sands,
Nexen remains dynamic in natural gas exploration in shale rock
formations. It owns approximately 300,000 acres of shale-gas
blocks in the Horn River Basin in British Columbia. This provides
the company with a multi-year inventory of development projects
and a positive long-term, production-growth profile.
The company has been actively investing in its upstream assets in
recent years, significantly improving its long-term,
production-growth prospect. Of late, Nexen has been in the news
regarding Chinese energy giant
) deal to purchase the company for approximately $15.1 billion in
Recently, Nexen missed the deadline for the completion of
maintenance work at the Buzzard oil field in the North Sea. Delay
in the commissioning of the fourth platform will hamper the
company's production target. Further, Nexen has been adversely
affected by natural field declines obstructing development
drilling activities, particularly in the GoM.
Again, execution problems in the company's line-up of long-cycle
projects persist. Hence, we maintain our long-term Neutral
recommendation. Nexen also carries a Zacks #3 Rank, which is
equivalent to a short-term Hold rating.