Nexen Inc. (NXY)

[Timothy Smith]

Nexen Inc. has completed the previously announced sale of a 40 percent interest in our northeast British Columbia shale gas assets to a consortium led by Inpex Corp. of Japan. The total consideration for the sale is $700 million, with 50 percent cash and a 50 percent capital carry, effective July 1, 2011.

With the deal closed, Nexen now holds a 60 percent operated interest in the joint venture lands, which are located in the Horn River, Cordova and Liard basins of northeast BC. The remaining 40 percent is now owned by Inpex Gas British Columbia Ltd. (IGBC), which is jointly established by Inpex and JGC Corporation.

Upon closing, we receive $821 million in cash, comprised of the initial cash payment and IGBC's share of costs since the effective date of the transaction, including reimbursement of their 40 percent share of capital and payment of capital carry on our 60 percent share. The remaining carry amount is approximately $106 million. We expect to record a gain on the sale in our third quarter financial results.

Nexen and IGBC are continuing with completion activities on an 18-well pad in the Horn River and expanding in-field facilities. The 18-well pad is slated to come on-stream in the fourth quarter and the facility expansion will increase our current production capacity to about 175 million cubic feet per day (MMcf/d) from approximately 50 MMcf/d. Nexen and IGBC plan to develop this resource as economic conditions permit. We have also agreed to jointly investigate the feasibility of LNG export opportunities.

"This is the beginning of a valuable long-term strategic partnership," said Kevin Reinhart, Nexen's interim President and CEO. "Our new partners have technical and commercial strengths that complement our own, and we look forward to working with them to capture the value of this vast resource."