Nexen Inc. partners with Shell in Gulf of Mexico exploration

Nexen Inc., Calgary, and Shell Exploration & Production Co. (Sepco), New Orleans, have agreed to jointly explore a 1,044 sq mile area of the US Gulf of Mexico for natural gas in Miocene reservoirs.

May 24, 2002

By OGJ editors

HOUSTON, May 24 -- Nexen Inc., Calgary, and Shell Exploration & Production Co. (Sepco), New Orleans, have agreed to jointly explore a 1,044 sq mile area of the US Gulf of Mexico for natural gas in Miocene reservoirs.

The agreement's focus of mutual interest covers 116 blocks in the Ship Shoal and South Timbalier areas. Within these areas, Nexen has the right to earn 40% interest, and Sepco has the right to earn 60% interest in any acreage acquired.

The first well to be drilled will be a test of the Fergana prospect on South Timbalier 239 and 248 blocks, 115 miles south of New Orleans in 210 ft of water. Drilling is expected to start in late May, and the well is expected to reach 22,500 ft TD in 140 days.

Nexen Pres. and CEO Charlie Fischer said, "We believe the deep Miocene offers deepwater-type reserve potential with the added advantage that discoveries can be brought on line quickly due to the abundance of infrastructure available on the shelf."