Calgary-based oil and gas producer
) has abandoned drilling operations in the Kakuna sub-salt
exploration well situated on Green Canyon block 504 in the
deepwater Gulf of Mexico. The company failed to excavate commercial
hydrocarbons from the Kakuna well.
The Kakuna well was drilled by
) Ensco 8502 semi-submersible to a depth of 30,300 feet. The
operations cost about $120 million or $80 million after tax to
The prospect was among the first to be drilled in the U.S. Gulf
in the post Macondo period. Initially, the exploration had intended
to come across potential reserves of about 400 million
barrels. Nexen, the operator holds a 52.5% interest while
) hold 27.5% and 20%, respectively. Statoil farmed in to the Kakuna
probe in June 2011.
According to Nexen, Kakuna well is one among the several
prospects in which it has a holding in the Gulf region. The other
prospects comprise the Miocene play in the central Gulf of Mexico
and the Norphlet play adjacent to its Appomattox discoveries.
Per the company's 2012 exploration program, Nexen plans to
explore around 15 offshore exploration and appraisal wells in the
UK North Sea, West Africa and the Gulf of Mexico regions. With
major discoveries already made in the Appomattox (Gulf of Mexico),
Golden Eagle (UK North Sea) and Owowo South B (West Africa) in the
past few years, the company remains optimistic about its
The current Zacks Consensus Estimates for Nexen are $2.10 and
$2.86 per share for fiscal years 2012 and 2013, respectively. The
estimates represent year-over-year growth of 43.1% for 2012 and
36.2% for 2013.
Nexen holds a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months. For the longer term, we
maintain our Neutral recommendation.
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