Met Third Quarter Production Guidance and On-Track to Meet Annual Production Guidance

CALGARY, Oct. 25, 2012 /PRNewswire/ - Nexen Inc. (TSX, NYSE: NXY) today reported third quarter operating and financial results and provided an update on strategic priorities.

Production volumes averaged 181,000 barrels of oil equivalent per day (boe/d), a decrease from second quarter production of 213,000 boe/d. This reflects the scheduled downtime associated with the turnarounds at Buzzard, Long Lake and Scott.

Cash flow from operations decreased to $560 million ($1.06/share) from $707 million ($1.34/share) in the second quarter, primarily due to the lower production and higher operating costs associated with the planned turnarounds. Net income decreased to $59 million ($0.11/share) from $109 million ($0.20/share) in the second quarter. This reflects lower cash flow associated with the scheduled turnarounds and the impact of several non-recurring items.

We continue to make good progress on our strategic priorities:





        --  Buzzard operations were strong prior to the turnaround with a
            production efficiency of 88% versus our plan of 85%.
        --  Offshore West Africa, we brought on two additional wells at
            Usan and increased current production to approximately 120,000
            barrels per day (bbls/d) (24,000 bbls/d net to Nexen).
        --  The planned major turnaround at Long Lake was completed without
            any significant issues. Bitumen production is back to
            approximately 34,000 bbls/d and the upgrader is producing
            PSCTM. Pad 12 continues to ramp-up and steaming continues at
            pad 13. First production is expected from pad 13 over the next
            several weeks.
        --  In the Gulf of Mexico, we completed a successful appraisal of
            the south fault block at Appomattox. We are currently drilling
            a sidetrack to test additional resource potential in the
            northwest fault block.
        --  Our previously announced shale gas joint venture with INPEX Gas
            British Columbia Ltd. (IGBC) closed in August and we received
            $821 million of cash upon closing. As well, our 18-well pad in
            the Horn River achieved start up in late September ahead of
            schedule.
        --  A number of exploration wells are in progress including North
            Uist and Bardolph in the UK North Sea. The Owowo West prospect,
            offshore West Africa is currently being evaluated.

"In the third quarter, we announced a plan to accelerate shareholder value while remaining focused on executing our plan and advancing strategic priorities across our operations," said Kevin Reinhart, Nexen's interim President & CEO. "We completed major turnarounds at Buzzard and Long Lake, met production guidance for the fourth consecutive quarter, and remained on-track to meet our production guidance for the year. Our ability to maintain focus and make continued strong progress in key areas of our operations is a testament to the talent and exceptional dedication of Nexen employees."

CNOOC Limited Offer for Nexen

On July 23, 2012, Nexen entered into an Arrangement Agreement under which CNOOC Limited proposes to acquire all of the outstanding common and preferred shares of Nexen for approximately US$15 billion in cash. On September 20, 2012, holders of Nexen's common and preferred shares approved the Plan of Arrangement, pursuant to the Arrangement Agreement. The closing of the arrangement remains subject to the receipt of required regulatory approvals and the satisfaction or waiver of the other customary closing conditions. We continue to expect the arrangement to close in the fourth quarter of 2012.

Operational Update

Conventional

UK North Sea - Buzzard production efficiency was strong in the third quarter prior to the turnaround, averaging 88% (86% year-to-date). This exceeds our target of 85% efficiency, excluding planned downtime.

The scheduled major turnaround at Buzzard that began in early September was completed with no significant issues discovered, although it did take longer than expected. We are in the process of restarting the platform, and expect production to ramp-up in the next week to 10 days.

The scheduled turnaround at Scott began in late July and was completed by the end of August.

The Golden Eagle development continues to progress towards first oil in late 2014. The fabrication of the platform facilities is well underway and construction is on-time and on-budget.

Drilling continues on our North Uist exploration prospect, which is located west of the Shetland Islands. The well has experienced delays due to mechanical issues, and results from the BP-operated well are now expected around the end of 2012.

Drilling is underway on our Bardolph exploration prospect in the North Sea. We have a 51% working interest in Bardolph. Results from this well are expected in the fourth quarter. Drilling is also underway at East Rochelle. Once drilling is completed, East Rochelle will be tied-back to our Scott platform.

Offshore West Africa - In July, we spudded an exploration well at Owowo West on block OPL-223. Drilling is now complete and we are evaluating the results. This well is in close proximity to our oil discovery at Owowo South B.

Oil production from Usan started in late February on block OML-138, offshore Nigeria. Nine wells are now on-stream, and during the quarter, daily production rates ranged from 90,000 - 122,000 bbls/d (18,000 - 24,000 bbls/d net to Nexen). We expect to bring on two additional wells over the next three months.

Gulf of Mexico - Our top priority in the Gulf of Mexico is continuing our exploration and appraisal program in the Norphlet play, including the Appomattox structure, along with the operator, Shell Gulf of Mexico Inc.

At Appomattox, we have booked 65 million barrels of probable reserves in the south fault block structure and added 50 million barrels of net contingent resource in the northeast fault block. A successful appraisal well in the south fault block of the structure confirmed reservoir quality at the upper end of our expectations. We are currently drilling a sidetrack from the appraisal well to test the incremental resource potential in the northwest fault block. Results are expected by the end of the year.

We have five more exploration and appraisal targets in the Norphlet play that we plan to test over the next twelve months. These wells will allow us to progress a development plan for Appomattox and continue to test the potential of the significant acreage position we have accumulated in the area.

We have a 20% interest in Appomattox, a 25% interest in Vicksburg and similar interests in numerous other blocks in the Norphlet play. The remaining interest is held by Shell.

During the third quarter we concluded negotiations around the Knotty Head-Pony field unitization. Nexen was the operator of the Knotty Head portion of the field and had a 25% working interest. Under the new equity agreement, Hess Corporation is the operator of the expanded Knotty Head-Pony project and all parties have a 20% working interest. 

Oil Sands

Long Lake - Production from Long Lake was 21,400 bbls/d of bitumen (gross), which was down from the second quarter due to the planned turnaround.

The scheduled turnaround began in mid-August and was completed by early October. During the turnaround, we carried out all required regulatory inspections, scheduled maintenance and preliminary preparation for future pads as planned without any significant issues.

With the turnaround complete, production is currently around 34,000 bbls/d. At pad 11, production continues to meet our expectations and recent weekly averages estimated at 6,000 bbls/d are consistent with production rates during the second quarter. At pad 12, we are currently producing from all nine wells. The nine well pairs on pad 13 are continuing to receive steam and first production is expected over the next several weeks.

The cash outflow during the quarter primarily reflects the impact of the turnarounds, including the expensed portion of the related costs and reduced production. Per-barrel operating costs were higher than normal due to the lower volumes.






                            Long Lake Quarterly Operating Metrics

             Bitumen       Steam        Unit
           Production    Injection    Operating       Cash       Realized
             (Gross)      (Gross)       Cost1         Flow        Price
            (bbls/d)      (bbls/d)     ($/bbl)    ($ millions)   ($/bbl)

    2012                                                               

      Q3      21,400       112,400        772           (64)         80

      Q2      33,700       170,000         70             4          87

      Q1      34,500       163,000         69            18          94

    2011                                                               

      Q4      31,500       151,000         67            22          97

      Q3      29,500       144,000         85           (4)          94

      Q2      27,900       152,000         95             6         109

      Q1      25,500       146,000         89           (19)         90

    2010                                                               

      Q4      28,100       158,000         86           (9)          83

      Q3      25,700       146,000         85           (42)         71








      1. Unit operating costs and realized prices are before royalties and
         based on PSC(TM) and bitumen volumes sold and exclude
         activities related to third-party bitumen purchased, processed and
         sold. Unit operating cost includes energy costs.
      2. Excludes costs related to the scheduled turnaround.

We continue to make good progress towards filling the upgrader over the next few years with additional wells in good-quality resource:






                      Number        Expected Peak                 
                   of Well Pairs    Rates bbls/d               Status

                                                     Pad 12 is producing
    Pads 12 & 13                                     and pad 13 is being
                                                         converted to
                                                         production.
                                                     Ramp-up over 12 - 24
                           18      11,000 - 17,000      month period.

    Pads 14 & 15                                      Drilling underway.
                                                     Steam in second half
                           11       4,000 - 7,000          of 2013.

    Kinosis 1A                                        Drilling underway.
                           29      15,000 - 25,000      Steam in 2014.



Nexen has a 65% working interest in both Long Lake and Kinosis and is the operator. CNOOC Canada Inc. holds a 35% working interest in both Long Lake and Kinosis.

Shale Gas

Northeast British Columbia - Our previously announced joint venture agreement with IGBC closed in August. We received $821 million of cash comprised of the cash consideration, reimbursement of IGBC's share of costs since July 1, 2011 (effective date) and IGBC's carry component of our costs since July 1, 2011. There continues to be approximately $60 million of carry remaining. Upon closing, we recognized an after-tax gain of $106 million. Nexen and IGBC plan to develop our shale gas resource as economic conditions permit. We have also agreed to jointly investigate the feasibility of LNG export opportunities.

We continued our execution excellence in the Horn River with the completion of our 18-well pad, setting an industry record of 6.3 fracs/day. Production testing of this pad started in late September, ahead of schedule.

Production Summary


                    Average Daily Quarterly       Average Daily Quarterly
                  Production before Royalties   Production after Royalties

    Crude Oil,                                                     
    NGLs and 
    Natural Gas
    (mboe/d)      Q3 2012   Q2 2012   Q3 2011   Q3 2012   Q2 2012   Q3 2011

    UK -                                                           
    Buzzard          60        84        49        60        84        49

    UK - Other       26        30        22        26        30        22

    Canada -                                                       
    Syncrude         23        17        22        22        17        21

    West Africa      20        20         -        18        18         -

    Canada -                                                       
    Oil & Gas        18        20        19        17        20        17

    United                                                         
    States           14        14        21        13        13        19

    Canada - In                                                    
    Situ             14        22        19        13        20        17

    Other                                                          
    Countries         6         6        34         3         5        19

    Total            181       213       186       172       207       164



Production decreased 15% from the second quarter on a before-royalties basis and 17% on an after-royalties basis. The decrease primarily reflects the impact of scheduled turnarounds at Long Lake, Buzzard and Scott.

Guidance Update


                                    Average Daily Production before Royalties

    Crude
    Oil, NGLs
    and 
    Natural       Q1       Q2                  Q3     Q4 2012    Q4 2012      2012
    Gas          2012     2012    Q3 2012     2012    Original   Adjusted    Annual
    (mboe/d)    Actual   Actual   Estimate   Actual   Estimate   Estimate   Estimate

    UK -
    Buzzard        82       84      50-60       60      75-95      50-60      70-85

    UK -
    Other          29       30      20-26       26      25-32      25-32      24-32

    Canada -
    Syncrude       21       17      22-24       23      22-24      22-24      21-23

    West
    Africa          3       20      20-35       20      22-35     22- 30      14-28

    Canada -
    Oil & Gas      22       20      15-17       18      15-20      15-20      15-19

    United
    States         16       14      13-17       14      15-17      15-17      15-19

    Canada -
    In Situ        22       22      14-18       14      22-28      22-28      19-25

    Other
    Countries       7       6          2         6         2          2          2

                                                                  ~180 -
                  202      213    ~160-190     181    ~205-240     200      ~185-220



In the third quarter, production of 181,000 boe/d was at the upper end of our production guidance primarily due to the timing of the Buzzard turnaround.

We are adjusting our fourth quarter guidance to 180,000 - 200,000 boe/d to reflect the timing and the length of the turnaround at Buzzard, as well as our updated expectations of production at Usan. Our expectations for our annual production guidance at Buzzard and Usan remain unchanged. We are also on-track to meet our annual production guidance of 185,000 - 220,000 boe/d. Buzzard, Usan and Long Lake continue to be the critical drivers of our guidance range.

Financial Results


                              Three Months Ended          Nine Months Ended

    (Cdn$ millions    Sept. 30   June 30   Sept. 30     Sept. 30   Sept. 30
    unless noted)         2012      2012       2011         2012       2011

    Brent ($US/bbl)     110.13    108.66     113.47       112.64     111.94

    WTI ($US/bbl)        92.22     93.49      89.76        96.21      95.48

    NYMEX natural                                                 
    gas ($US/mmbtu)       2.90      2.35       4.06         2.58       4.21

    Nexen Average                                                 
    Realized Oil &
    Gas Price
    ($/boe)              89.52     88.65      91.06        90.94      90.58

    Cash netback                                                  
    ($/boe)1             48.90     44.51      38.67        46.32      39.43

    Average Daily                                                 
    Production
    (mboe/d)                                                               

      Before                                                      
      Royalties            181       213        186          199        207

      After                                                       
      Royalties            172       207        164          190        184

    Cash flow from                                                
    operations2            560       707        516        1,937      1,783

      Per common                                                  
      share
      ($/share)           1.06      1.34       0.98         3.66       3.38

    Net income              59       109        200          339        654

      Per common                                                  
      share
      ($/share)           0.11      0.20       0.38         0.63       1.24

    Capital                                                       
    investment3            831       743        729        2,331      1,758

    Net debt4            2,367     3,136      3,454        2,367      3,454








      1. Cash netback is defined as our corporate average cash netback from
         oil and gas operations, after-tax. Excludes costs related to the
         scheduled turnaround at Long Lake.
      2. For reconciliation of this non-GAAP measure, see Cash Flow from
         Operations on pg. 8.
      3. Includes geological and geophysical expenditures.
      4. Net debt is defined as long-term debt and short-term borrowings
         less cash and cash equivalents.

The third quarter financial results were impacted by decreased production volumes and higher operating costs resulting from the planned turnarounds at Long Lake, Buzzard and Scott. Cash netbacks increased more than benchmark prices due to narrowing of Canadian differentials and increased contribution from our high-netback Usan production.

Net income decreased 46% from the prior quarter to $59 million ($0.11/share) due to lower cash flow associated with the planned turnarounds and the impact of several non-recurring items. These include an after-tax stock-based compensation charge of $99 million as a result of our share price appreciation following the CNOOC announcement and a deferred income tax charge of $63 million for changes to UK tax legislation. These charges were partially offset by the after-tax gain of $106 million on the shale gas joint venture.

Net debt decreased compared to the second quarter primarily due to the proceeds on closing of our shale gas joint venture.

Quarterly Dividends

The Board of Directors has declared the regular quarterly dividend of $0.05 per common share payable January 1, 2013 to shareholders of record on December 10, 2012.

Due to the previously announced transaction with CNOOC Limited, the Board of Directors has determined not to declare the regular dividend on our Series 2 Preferred Shares at this time. This decision will have no effect on the amount to which holders of the Preferred Shares are entitled. If the transaction closes prior to December 31, 2012, holders of the Preferred Shares will receive consideration equal to $26 plus an amount equal to all accrued and unpaid dividends for each share held, up to but not including the date of closing. If the transaction does not close prior to December 31, 2012, the Board expects to declare a regular quarterly dividend to the shareholders of record, on a record date to be subsequently determined.

About Nexen

Nexen Inc. is a Canadian-based global energy company, listed on the Toronto and New York stock exchanges under the symbol NXY. Nexen is focused on three growth strategies: oil sands and shale gas in western Canada and conventional exploration and development primarily in the North Sea, offshore West Africa and deepwater Gulf of Mexico. Nexen adds value for shareholders through successful full-cycle oil and gas exploration and development, and leadership in ethics, integrity, governance and environmental stewardship.

For further information on our shale gas joint venture, please refer to our press release dated November 29, 2011. For more information on our estimates of reserves, please refer to our 2011 Annual Information Form. For more information on our estimates of resource, please refer to our press releases dated November 15, 2010 and April 2, 2012.

Forward-Looking Statements

Certain statements in this Release constitute "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended) or "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements or information (together "forward-looking statements") are generally identifiable by the forward-looking terminology used such as "anticipate", "believe", "intend", "plan", "expect", "estimate", "budget", "outlook", "forecast" or other similar words and include statements relating to or associated with individual wells, regions or projects. Any statements as to possible future crude oil or natural gas prices; future production levels; future royalties and tax levels; future capital expenditures, their timing and their allocation to exploration and development activities; future earnings; future asset acquisitions or dispositions; future sources of funding for our capital program; future debt levels; availability of committed credit facilities; possible commerciality of our projects; development plans or capacity expansions; the expectation that we have the ability to substantially grow production at our oil sands facilities through controlled expansions; the expectation of achieving the production design rates from our oil sands facilities; the expectation that our oil sands production facilities continue to develop better and more sustainable practices; the expectation of cheaper and more technologically advanced operations; the expected design size of our facilities; the expected timing and associated production impact of facility turnarounds and maintenance; the expectation that we can continue to operate our offshore exploration, development and production facilities safely and profitably; future ability to execute dispositions of assets or businesses; future sources of liquidity, cash flows and their uses; future drilling of new wells; ultimate recoverability of current and long-term assets; ultimate recoverability of reserves or resources; expected finding and development costs; expected operating costs; future cost recovery oil revenues from our Yemen operations; the expectation of our ability to comply with the new safety and environmental rules enacted in the US at a minimal incremental cost, and of receiving necessary drilling permits for our US offshore operations; estimates on a per share basis; future foreign currency exchange rates; future expenditures and future allowances relating to environmental matters and our ability to comply with them; dates by which certain areas will be developed, come on stream or reach expected operating capacity; the timing and anticipated receipt of required regulatory and court  approvals for the arrangement with CNOOC Limited;  the ability of the parties to satisfy the other conditions to, and to complete, the arrangement transaction; the anticipated timing of the closing of the arrangement transaction; and changes in any of the foregoing are forward-looking statements.

Statements relating to "reserves" or "resources" are forward-looking statements, as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future.

All of the forward-looking statements in this Release are qualified by the assumptions that are stated or inherent in such forward-looking statements. Although we believe that these assumptions are reasonable based on the information available to us on the date such assumptions were made, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: that we will conduct our operations and achieve results of operations as anticipated; that our development plans will achieve the expected results; the general continuance of current or, where applicable, assumed industry conditions; the continuation of assumed tax, royalty and regulatory regimes; the accuracy of the estimates of our reserve volumes; commodity price and cost assumptions; the continued availability of adequate cash flow and debt and/or equity financing to fund our capital and operating requirements as needed; the ability of the parties to the July 23 2012 Arrangement Agreement to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, stock exchange and other third party approvals, including but not limited to the receipt of applicable foreign investment approval required in Canada, the United States and elsewhere and the required approvals from the Government of the People's Republic of China and in other foreign jurisdictions; the ability of the parties to the Arrangement Agreement to satisfy, in a timely manner, the other conditions to the closing of the transaction; other expectations and assumptions concerning the arrangement transaction and the operations and capital expenditure plans of Nexen following completion of the transaction;  and, the extent of our liabilities. We believe the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable, but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

Forward-looking statements are subject to known and unknown risks and uncertainties and other factors, many of which are beyond our control and each of which contributes to the possibility that our forward-looking statements will not occur or that actual results, levels of activity and achievements may differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for oil and gas; our ability to explore, develop, produce, upgrade and transport crude oil and natural gas to markets; ultimate effectiveness of design or design modifications to facilities; the results of exploration and development drilling and related activities; the cumulative impact of oil sands development on the environment; the impact of technology on operations and processes and how new complex technology may not perform as expected; the availability of pipeline and global refining capacity; risks inherent to the operations of any large, complex refinery units, especially the integration between production operations and an upgrader facility; availability of third-party bitumen for use in our oil sands production facilities; labour and material shortages; risks related to accidents, blowouts and spills in connection with our offshore exploration, development and production activities, particularly our deep-water activities; direct and indirect risks related to the imposition of moratoriums, suspensions or cancellations of our offshore exploration, development and production operations, particularly our deep-water activities; the impact  of severe weather on our offshore exploration, development and production activities, particularly our deep-water activities; the effectiveness and reliability of our technology in harsh and unpredictable environments; risks related to the actions and financial circumstances of our agents and contractors, counterparties and joint venture partners; volatility in energy trading markets; foreign currency exchange rates; economic conditions in the countries and regions in which we carry on business; governmental actions including changes to taxes or royalties, changes in environmental and other laws and regulations including without limitation, those related to our offshore exploration, development and production activities; renegotiations of contracts; results of litigation, arbitration or regulatory proceedings; political uncertainty, including actions by terrorists, insurgent or other groups, or other armed conflict, including conflict between states; the possible failure of Nexen and CNOOC Limited to obtain necessary regulatory, court and other third party approvals, including those noted above, or to otherwise satisfy the conditions to the completion of the transaction, in a timely manner or at all; if the arrangement transaction is not completed and Nexen continues as an independent entity, there are risks that the announcement of the transaction and the dedication of substantial resources of Nexen to the completion of the transaction could have an impact on Nexen's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and further operations, financial condition and prospects of Nexen; the possible failure of Nexen to comply with the terms of the Arrangement Agreement may result in Nexen being required to pay a fee to CNOOC Limited, the  result of which could have a material and adverse effect on Nexen's  financial position and results of operations and its ability to fund growth prospects and current operations; and other factors, many of which are beyond our control.

These risks, uncertainties and other factors and their possible impact are discussed more fully in the sections titled "Risk Factors" in our 2011 Annual Information Form and "Quantitative and Qualitative Disclosures About Market Risk" in our 2011 annual MD&A. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are interdependent, and management's future course of action would depend on our assessment of all information at that time. Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the forward-looking statements contained herein, which are made as of the date hereof as the plans, intentions, assumptions or expectations upon which they are based might not occur or come to fruition. Except as required by applicable securities laws, Nexen undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Included herein is information that may be considered financial outlook and/or future-oriented financial information (FOFI). Its purpose is to indicate the potential results of our intentions and may not be appropriate for other purposes. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Note to Investors on Reserves and Resources

The reserves estimates in this disclosure were prepared with an effective date of December 31, 2011.  The resource estimates were prepared on March 31, 2012.  These estimates have been internally prepared by an internal qualified reserves evaluator in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). For more information on this reserves estimate and Nexen's reserves estimation process please refer to our 2011 Annual Information Form. For more information on our Appomattox resource estimate please refer to our press release dated April 2, 2012. Both our Annual Information Form and news releases are available at www.nexeninc.com and www.sedar.com.

Conversions of gas volumes to boe in these estimates were made on the basis of 1 boe to 6 mcf of natural gas. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Using the forecast prices applied to our reserves estimates, the boe conversion ratio based on wellhead value is approximately 30 mcf:1 bbl. Disclosure provided herein in respect of boes may be misleading, particularly if used in isolation.

Nexen Inc.
Financial Highlights


                            Three Months Ended           Nine Months Ended

                      Sept.                 Sept.                 
                         30     June 30        30     Sept. 30     Sept. 30

    (Cdn$                                                         
    millions,
    except
    per-share
    amounts)           2012        2012      2011         2012         2011

    Net Sales1        1,495       1,659     1,399        4,850        4,546

    Cash Flow                                                     
    from
    Operations1         560         707       516        1,937        1,783

          Per                                                     
    Common
    Share,
    Basic
    ($/share)          1.06        1.34      0.98         3.66         3.38

          Per                                                     
    Common
    Share,
    Diluted
    ($/share)          1.03        1.28      0.95         3.55         3.29

    Net Income1          59         109       200          339          654

          Per                                                     
    Common
    Share,
    Basic
    ($/share)          0.11        0.20      0.38         0.63         1.24

    Capital                                                       
    Investment
    2                   831         743       729        2,331        1,758

    Net Debt 3        2,367       3,136     3,454        2,367        3,454

    Common                                                        
    Shares
    Outstanding
    (millions
    of shares)        530.0       529.3     527.4        530.0        527.4



(1)    Includes results of discontinued operations. See Note 23 of our 2011 Annual Consolidated Financial Statements.
(2)    Includes oil and gas development, exploration, and expenditures for other property, plant and equipment.
(3)    Net debt is defined as long-term debt and short-term borrowings less cash and cash equivalents.

Cash Flow from Operations (1)


                              Three Months Ended        Nine Months Ended   

                         Sept.      June     Sept.       Sept.       Sept.  
                            30        30        30          30          30

    (Cdn$                                                                   
    millions)             2012      2012      2011        2012        2011

    Conventional                                                            
    Oil & Gas                                                             

          United                                                            
    Kingdom                737       919       645       2,721       2,231

          North                                                             
    America                 13        15        50          66         206

          Other                                                             
    Countries 2            182       165       132         366         443

    Oil Sands                                                               

          In Situ         (64)         4       (4)        (42)        (17)  

          Syncrude         106        70       106         267         316  

                           974     1,173       929       3,378       3,179  

    Interest,                                                              3
    Marketing and
    Other
    Corporate
    Items                (129)      (70)      (62)       (280)       (237)

    Current Income                                                          
    Taxes                (285)     (396)     (351)     (1,161)     (1,159)

    Cash Flow from                                                
    Operations             560       707       516       1,937       1,783  



(1)    Defined as cash flow from operating activities before changes in non-cash working capital and other. We evaluate our performance and that of our business segments based on earnings and cash flow from operations. Cash flow from operations is a non-GAAP term that represents cash generated from operating activities before changes in non-cash working capital and other. We consider it a key measure as it demonstrates our ability to generate the cash flow necessary to fund future growth through capital investment. Cash flow from operations may not be comparable with the calculation of similar measures for other companies.






                             Three Months Ended        Nine Months Ended

                       Sept.                 Sept.     Sept.    
                          30     June 30        30        30     Sept. 30

    (Cdn$                                                       
    millions)           2012        2012      2011      2012         2011

    Cash Flow                                                   
    from
    Operating
    Activities           515       1,159       288     2,182        2,038

    Changes in                                                  
    Non-Cash
    Working
    Capital                4       (446)       198     (296)        (287)

    Other                 53           6        38        87           56

    Impact of                                                   
    Annual Crude
    Oil Put
    Options             (12)        (12)       (8)      (36)         (24)

    Cash Flow                                                   
    from
    Operations           560         707       516     1,937        1,783

                                                                         

    Weighted                                                    
    Average
    Number of
    Common
          Shares
    Outstanding,
    Basic
    (millions of
    shares)              530         529       527       529          527

    Cash Flow                                                   
    from
    Operations
    Per Common
          Share,
    Basic
    ($/share)           1.06        1.34      0.98      3.66         3.38

                                                                         

    Cash Flow                                                   
    from
    Operations,
    Diluted              566         713       522     1,956        1,802

    Weighted                                                    
    Average
    Number of
    Common
          Shares
    Outstanding,
    Diluted
    (millions of
    shares)              550         556       550       551          547

    Cash Flow                                                   
    from
    Operations
    Per Common
          Share,
    Diluted
    ($/share)           1.03        1.28      0.95      3.55         3.29



(2)   Includes Nigeria, Yemen and Colombia.
(3)   Includes results of discontinued operations. See Note 23 of our 2011 Annual Consolidated Financial Statements.

Nexen Inc.
Production Volumes (before royalties)( 1)


                                                              Nine Months
                                  Three Months Ended             Ended

                             Sept.      June     Sept.     Sept.     Sept.
                                30        30        30        30        30

    (mboe/d)                  2012      2012      2011      2012      2011

    Conventional                                                    
    Oil and Gas                                                           

          United                                                    
    Kingdom                   85.8     114.2      71.1     103.6      85.7

          North                                                     
    America 2                 32.3      34.4      39.7      34.9      44.8

          Other                                                     
    Countries 3               25.8      25.5      33.9      20.3      36.8

                             143.9     174.1     144.7     158.8     167.3

    Oil Sands                                                             

          Long                                                      
    Lake Bitumen 4            13.9      21.9      19.2      19.4      18.0

          Syncrude            22.7      17.2      21.6      20.4      21.7

                              36.6      39.1      40.8      39.8      39.7

                                                                          

    Total                                                           
    Production               180.5     213.2     185.5     198.6     207.0

                                                                          

    Total Crude                                                     
    Oil and
    Liquids
    (mbbls/d)                150.6     178.7     149.2     165.6     165.5

    Total Natural                  5                             6  
    Gas (mmcf/d)               180       207       218       198       249

                                                                      



Production Volumes (after royalties)


                                  Three Months Ended          Nine Months
                                                                 Ended

                             Sept.      June     Sept.     Sept.     Sept.
                                30        30        30        30        30

    (mboe/d)                  2012      2012      2011      2012      2011

    Conventional                                                    
    Oil and Gas                                                           

          United                                                    
    Kingdom                   85.2     113.7      70.7     103.1      85.5

          North                                                     
    America 2                 30.0      33.1      36.0      32.8      40.7

          Other                                                     
    Countries 3               21.3      22.9      18.9      16.9      20.5

                             136.5     169.7     125.6     152.8     146.7

    Oil Sands                                                             

          Long                                                      
    Lake Bitumen 4            13.2      20.4      17.3      18.2      16.6

          Syncrude            22.0      16.9      20.6      19.2      20.2

                              35.2      37.3      37.9      37.4      36.8

                                                                          

    Total                                                           
    Production               171.7     207.0     163.5     190.2     183.5

                                                                          

    Total Crude                                                     
    Oil and
    Liquids
    (mbbls/d)                143.4     173.2     130.0     158.5     145.2

    Total Natural                                                   
    Gas (mmcf/d)               170       203       201       190       230



(1)   We have presented production volumes before royalties as we measure our performance on this basis consistent with other Canadian oil and gas companies.
(2)   Includes shale gas production in Canada.
(3)   Includes Nigeria, Yemen and Colombia.
(4)   We report Long Lake bitumen as production.
(5)   Includes 107 mmcf/d of natural gas production in Canada, 43 in the US and 30 in the UK (2011--111, 81 and 26, respectively).
(6)   Includes 120 mmcf/d of natural gas production in Canada, 44 in the US and 34 in the UK (2011--123, 94 and 32, respectively).

Nexen Inc.
Oil and Gas Prices and Cash Netbacks (1)


                                                                                                                   Total
                                             Quarters - 2012                             Quarters - 2011            Year

    (all dollar amounts                                        4th                                                
    in Cdn$ unless
    noted)                       1st        2nd        3rd                1st        2nd        3rd        4th       2011

    PRICES:                                                                                                              

    Brent Crude Oil                                                                                               
    (US$/bbl)                 119.13     108.66     110.13             104.97     117.36     113.47     109.31     111.28

    WTI Crude Oil                                                                                                 
    (US$/bbl)                 102.93      93.49      92.22              94.10     102.56      89.76      94.06      95.12

    Nexen Average - Oil                                                                                           
    (Cdn$/bbl)                111.62     102.21     103.43              98.37     110.28     103.98     108.44     105.21

    NYMEX Natural Gas                                                                                             
    (US$/mmbtu)                 2.51       2.35       2.90               4.20       4.37       4.06       3.48       4.03

    AECO Natural Gas                                                                                              
    (Cdn$/mcf)                  2.39       1.74       2.08               3.58       3.54       3.53       3.29       3.48

    Nexen Average - Gas                                                                                           
    (Cdn$/mcf)                  3.13       2.58       3.19               4.51       4.75       4.36       3.63       4.31

    NETBACKS 1:                                                                                                          

    United Kingdom                                                                                                       

          Crude Oil:                                                                                                     

                Sales                                                                                             
    (mbbls/d)                  106.9      105.3       82.1              104.2       73.3       75.2       92.7       86.3

                Price                                                                                             
    Received ($/bbl)          118.12     105.82     108.39              99.97     110.67     107.58     110.46     106.76

          Natural Gas:                                                                                                   

                Sales                                                                                             
    (mmcf/d)                      33         31         31                 36         37         26         22         30

                Price                                                                                             
    Received ($/mcf)            7.83       6.64       7.43               7.29       8.20       7.28       6.52       7.42

          Total Sales                                                                                             
    Volume (mboe/d)            112.3      110.4       87.3              110.2       79.5       79.5       96.4       91.3

                                                                                                                         

          Price                                                                                                   
    Received ($/boe)          114.65     102.74     104.57              96.91     105.87     104.13     107.70     103.32

          Royalties &                                                                                             
    Other                       0.51       0.55       0.71                  -       0.11       0.82       0.54       0.36

          Operating                                                                                               
    Costs                      10.14      10.90      13.78               9.85       8.48      14.46       9.99      10.60

          In-country                                                                                              
    Taxes                      45.41      38.84      32.04              42.46      42.76      41.00      43.24      42.41

          Netback              58.59      52.45      58.04              44.60      54.52      47.85      53.93      49.95

    Oil Sands - In Situ                                                                                           
    2                                                                                                                    

          Sales                                                                                                   
    (mbbls/d)                   17.8       16.5       11.2               12.9       14.3       11.8       16.7       13.9

                                                                                                                         

          Price                                                                                                   
    Received ($/bbl)           94.45      86.58      80.13              89.82     108.78      94.15      97.28      98.33

          Royalties &                                                                                             
    Other                       4.79       6.10       3.22               3.58       6.05       5.07       5.29       5.05

          Operating                                        3                                                      
    Costs                      68.89      69.95      77.36              89.43      95.34      85.42      67.41      83.44

                Netback                                                                                           
    2                          20.77      10.53     (0.45)             (3.19)       7.39       3.66      24.58       9.84

    Oil Sands -                                                                                                   
    Syncrude                                                                                                             

          Sales                                                                                                   
    (mbbls/d)                   21.3       17.2       22.7               23.2       20.4       21.6       18.2       20.8

                                                                                                                         

          Price                                                                                                   
    Received ($/bbl)           92.54      89.85      91.48              94.60     111.79      97.65     104.32     101.73

          Royalties &                                                                                             
    Other                      11.25     (3.03)       1.84               4.30      13.82       4.65      10.59       8.10

          Operating                                                                                               
    Costs                      31.36      44.96      35.93              36.11      39.98      37.10      38.24      37.78

                Netback        49.93      47.92      53.71              54.19      57.99      55.90      55.49      55.85

    United States                                                                                                        

          Crude Oil:                                                                                                     

                Sales                                                                                             
    (mbbls/d)                    8.0        7.3        7.4                9.2        8.9        7.7        7.2        8.2

                Price                                                                                             
    Received ($/bbl)          108.40     102.19      99.04              91.39     101.89      96.00     110.89      99.65

          Natural Gas:                                                                                                   

                Sales                                                                                             
    (mmcf/d)                      50         41         43                103         96         81         66         86

                Price                                                                                             
    Received ($/mcf)            2.67       2.19       2.89               4.36       4.42       4.27       3.59       4.21

          Total Sales                                                                                             
    Volume (mboe/d)             16.3       14.1       14.5               26.3       24.9       21.2       18.2       22.6

                                                                                                                         

          Price                                                                                                   
    Received ($/boe)           61.33      58.84      58.91              48.91      53.56      50.72      57.27      52.31

          Royalties &                                                                                             
    Other                       6.02       6.12       6.50               5.65       6.11       5.63       3.31       5.30

          Operating                                                                                               
    Costs                      17.29      17.87      19.37              10.43      10.72      11.18      16.73      11.96

          Netback              38.02      34.85      33.04              32.83      36.73      33.91      37.23      35.05



(1)   Netbacks are defined as average sales price less royalties, other operating costs and in-country taxes.
(2)   Excludes activities related to third-party bitumen purchased, processed and sold.
(3)   Excludes costs related to turnaround activities.

Nexen Inc.
Oil and Gas Cash Netback (1)( )(continued)


                                                                                                                Total
                                          Quarters - 2012                             Quarters - 2011            Year

    (all dollar                                                                                                
    amounts in Cdn$
    unless noted)             1st        2nd        3rd     4th        1st        2nd        3rd        4th       2011

    Canada - Natural                                                                                           
    Gas 2                                                                                                             

          Sales                                     105                                                        
    (mmcf/d)                  131        120                            97         85         79        112         93

                                                                                                                      

          Price                                    2.05                                                        
    Received ($/mcf)         2.12       1.67                          3.65       3.62       3.51       3.08       3.44

          Royalties                                0.06                                                        
    & Other                  0.08     (0.05)                          0.28       0.24       0.27       0.17       0.23

          Operating                                1.72                                                        
    Costs                    1.58       1.62                          1.70       1.54       1.65       1.70       1.65

          Netback            0.46       0.10       0.27               1.67       1.84       1.59       1.21       1.56

    Other Countries                                                                                            
    3                                                                                                                 

          Sales                                    27.4                                                        
    (mbbls/d)                 5.4       27.0                          36.7       41.0       33.5       29.4       35.1

                                                                                                                      

          Price                                  109.24                                                        
    Received ($/bbl)       119.61     105.59                        101.17     111.56     107.64     111.10     107.85

          Royalties                               18.44                                                        
    & Other                 48.76      17.27                         44.95      50.38      47.54      43.83      46.92

          Operating                               14.42                                                        
    Costs                   13.02      17.70                         10.62       9.23      12.97      19.89      12.73

          In-country                               1.94                                                        
    Taxes                    9.31       2.50                         12.81      15.58      14.71      13.27      14.17

          Netback           48.52      68.12      74.44              32.79      36.37      32.42      34.11      34.03

    Company-Wide                                                                                                      

          Oil and                                 180.6                                                        
    Gas Sales
    (mboe/d)                195.0      205.2                         225.5      194.3      180.7      197.6      199.2

                                                                                                                      

          Price                                   89.52                                                        
    Received ($/boe)        94.67      88.65                         85.98      95.31      91.06      94.11      91.46

          Royalties                                4.12                                                        
    & Other                  3.87       3.19                          8.74      13.47      10.83       8.62      10.34

          Operating                                     4                                                      
    Costs                   18.56      19.74      20.71              17.32      18.68      20.80      19.56      19.00

          In-country                              15.79                                                        
    Taxes                   26.43      21.21                         22.84      20.78      20.76      23.08      21.92

          Netback           45.81      44.51      48.90              37.08      42.38      38.67      42.85      40.20



(1)   Netbacks are defined as average sales price less royalties and other, operating costs and in-country taxes.
(2)   Includes Canadian conventional, CBM and shale gas activities. Shale gas was included beginning in the fourth quarter of 2011 when it became commercial.
(3)   Includes Yemen, Colombia and West Africa.
(4)   Excludes costs related to turnaround activities.

Nexen Inc.
Unaudited Condensed Consolidated Statement of Income
For the Three and Nine Months Ended September 30


                                      Three Months              Nine Months
                                Ended September 30       Ended September 30

    (Cdn$ millions,                                               
    except per-share
    amounts)                     2012         2011        2012         2011

    Revenues and Other                                            
    Income                                                                 

          Net Sales             1,495        1,399       4,850        4,504

          Marketing and                                           
    Other Income (Note 8)          14          125         165          254

                                1,509        1,524       5,015        4,758

    Expenses                                                               

          Operating               401          356       1,116        1,060

          Depreciation,                                           
    Depletion,
    Amortization and
    Impairment                    427          409       1,312        1,114

          Transportation                                          
    and Other                     128          110         353          289

          General and                                             
    Administrative                223           23         464          204

          Exploration              49           59         264          278

          Finance (Note                                           
    5)                             80           59         225          193

          Loss on Debt                                            
    Redemption and
    Repurchase                      -            -           -           91

          Gain from                                               
    Dispositions (Note
    10)                         (145)            -       (197)         (12)

                                1,163        1,016       3,537        3,217

                                                                           

    Income from                                                   
    Continuing Operations
    before Provision
          for Income
    Taxes                         346          508       1,478        1,541

                                                                           

    Provision for                                                 
    (Recovery of) Income
    Taxes                                                                  

          Current                 285          351       1,161        1,159

          Deferred                  2         (43)        (22)           30

                                  287          308       1,139        1,189

                                                                           

    Net Income from                                               
    Continuing Operations          59          200         339          352

    Net Income from                                               
    Discontinued
    Operations, Net of
    Tax                             -            -           -          302

    Net Income                                                    
    Attributable to Nexen
    Inc. Shareholders              59          200         339          654

                                                                           

    Earnings Per Common                                           
    Share from Continuing
          Operations
    ($/share) (Note 6)                                                     

                Basic            0.11         0.38        0.63         0.67

                                                                           

                Diluted          0.11         0.32        0.63         0.61

                                                                           

    Earnings Per Common                                           
    Share($/share) (Note
    6)                                                                     

                Basic            0.11         0.38        0.63         1.24

                                                                           

                Diluted          0.11         0.32        0.63         1.16



See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

Nexen Inc.
Unaudited Condensed Consolidated Balance Sheet


                                                September       December 31
                                                       30

    (Cdn$ millions)                                  2012              2011

    Assets                                                                 

          Current Assets                                                   

                Cash and Cash                       1,870               845
    Equivalents

                Restricted Cash                        18                45

                Accounts                            1,582             2,247
    Receivable

                Derivative                             62               119
    Contracts

                Inventories and                       351               320
    Supplies

                Other                                 140               115

                      Total                         4,023             3,691
    Current Assets

          Non-Current Assets                                               

                Property, Plant                    15,462            15,571
    and Equipment (Note 3)

                Goodwill                              282               291

                Deferred Income                       482               338
    Tax Assets

                Derivative                              4                25
    Contracts

                Other Long-Term                        98               152
    Assets

    Total Assets                                   20,351            20,068

                                                                           

    Liabilities                                                            

          Current Liabilities                                              

                Accounts                            2,591             2,867
    Payable and Accrued
    Liabilities

                Income Taxes                          609               458
    Payable

                Derivative                             63               103
    Contracts

                      Total                         3,263             3,428
    Current Liabilities

          Non-Current                                                      
    Liabilities

                Long-Term Debt                      4,237             4,383

                Deferred Income                     1,574             1,488
    Tax Liabilities

                Asset                               1,973             2,010
    Retirement Obligations

                Derivative                              4                24
    Contracts

                Other Long-Term                       452               362
    Liabilities

    Equity (Note 6)                                                        

                Share Capital                                              

                      Common                        1,194             1,157
    Shares

                      Preferred                       195                 -
    Shares

                Retained                            7,465             7,211
    Earnings

                Cumulative                            (6)                 5
    Translation Adjustment

          Total Equity                              8,848             8,373

    Total Liabilities and                          20,351            20,068
    Equity



See accompanying notes to Unaudited Condensed Consolidated Financial Statements.

Nexen Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
For the Three and Nine Months Ended September 30


                                      Three Months               Nine Months
                                   Ended September        Ended September 30
                                                30

    (Cdn$ millions)                 2012      2011          2012        2011

    Operating Activities                                                    

          Net Income from                                           
    Continuing Operations             59       200           339         352

          Net Income from                                           
    Discontinued Operations            -         -             -         302

          Charges and                                               
    Credits to Income not
    Involving Cash (Note 9)          464       265         1,370         875

          Exploration                                               
    Expense                           49        59           264         278

          Changes in                                                
    Non-Cash Working Capital
    (Note 9)                         (4)     (198)           296         287

          Other                     (53)      (38)          (87)        (56)

                                     515       288         2,182       2,038

                                                                            

    Financing Activities                                                    

          Repayment of                                              
    Long-Term Debt                     -         -             -       (871)

          Issue of Common                                           
    Shares                            11         8            37          39

          Issue of Preferred                                        
    Shares                             -         -           195           -

          Dividends Paid on                                         
    Common and Preferred
    Shares                          (29)      (26)          (82)        (78)

          Other                        -         1           (6)           2

                                    (18)      (17)           144       (908)

                                                                            

    Investing Activities                                                    

          Capital                                                   
    Expenditures                                                            

                Exploration,                                        
    Evaluation and
    Development                    (807)     (716)       (2,261)     (1,708)

                Corporate                                           
    and Other                       (24)      (13)          (70)        (50)

          Proceeds from                                             
    Dispositions (Note 10)           828         1           881         475

          Changes in                                                
    Restricted Cash                   83         1            27        (10)

          Changes in                                                
    Non-Cash Working Capital
    (Note 9)                          75        69           140         184

          Other                      (2)         -             3        (75)

                                     153     (658)       (1,280)     (1,184)

                                                                            

    Effect of Exchange Rate                                         
    Changes on Cash and Cash
    Equivalents                     (35)       100          (21)          74

                                                                            

    Increase (Decrease) in                                          
    Cash and Cash
    Equivalents                      615     (287)         1,025          20

                                                                            

    Cash and Cash                                                   
    Equivalents - Beginning
    of Period                      1,255     1,312           845       1,005

                                                                            

    Cash and Cash                                                   
    Equivalents - End of
    Period 1                       1,870     1,025         1,870       1,025



(1   )Cash and cash equivalents at September 30, 2012 consists of cash of $620 million and short-term investments of $1,250 million (September 30, 2011 cash of $277 million and short-term investments of $748 million).

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

Nexen Inc.
Unaudited Condensed Consolidated Statement of Changes in Equity
For the Three and Nine Months Ended September 30


                                       Three Months           Nine Months
                                    Ended September       Ended September
                                                 30                    30

    (Cdn$ millions)                  2012      2011        2012      2011

                                                                         

    Share Capital                                                        

          Common Shares,                                           
    Beginning of Period             1,183     1,142       1,157     1,111

                Issue of                                           
    Common Shares                      11         8          37        39

          Common Shares,                                           
    Balance at End of
    Period                          1,194     1,150       1,194     1,150

                                                                         

          Preferred                                                
    Shares, Beginning of
    Period                            195         -           -         -

                Issue of                                           
    Preferred Shares                    -         -         195         -

          Preferred                                                
    Shares, Balance at
    End of Period                     195         -         195         -

                                                                         

    Retained Earnings,                                             
    Beginning of Period             7,435     7,094       7,211     6,692

                Net                                                
    Income Attributable
    to Nexen Inc.
    Shareholders                       59       200         339       654

                Dividends                                          
    on Common and
    Preferred Shares
    (Note 6)                         (29)      (26)        (85)      (78)

          Balance at End                                           
    of Period                       7,465     7,268       7,465     7,268

                                                                         

    Cumulative                                                     
    Translation
    Adjustment,Beginning
    of Period                          26      (55)           5      (37)

                Currency                                           
    Translation
    Adjustment                       (35)        63        (30)        45

                Realized                                           
    Translation
    Adjustments 1                       3         -          19         -

          Balance at End                                           
    of Period                         (6)         8         (6)         8



(1  )Net of income tax recovery for the three months ended September 30, 2012 of $2 million (2011 - net of income tax expense of $4 million) and net of income tax recovery for the nine months ended September 30, 2012 of $9 million (2011 - net of income tax expense of $24 million).

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

Nexen Inc.
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the Three and Nine Months Ended September 30


                                         Three Months           Nine Months
                                      Ended September       Ended September
                                                   30                    30

    (Cdn$ millions)                    2012      2011        2012      2011

    Net Income Attributable              59       200         339       654
    to Nexen Inc.
    Shareholders

          Other Comprehensive                                              
    Income (Loss):

                Currency                                                   
    Translation Adjustment

                      Net             (163)       339       (149)       200
    Translation Gains
    (Losses) of Foreign
    Operations

                      Net                                            
    Translation Gains
    (Losses) on
    US$-Denominated
                         Debt
    Hedging of Foreign
    Operations 1                        128     (276)         119     (155)

     Total Currency                    (35)        63        (30)        45
    Translation Adjustment

    Total Comprehensive                  24       263         309       699
    Income



(1  )Net of income tax expense for the three months ended September 30, 2012 of $18 million (2011 - net of income tax recovery of $39 million) and net of income tax expense for the nine months ended September 30, 2012 of $17 million (2011 - net of income tax recovery of $22 million).

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

Nexen Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Cdn$ millions, except as noted

1. BASIS OF PRESENTATION

Nexen Inc. (Nexen, we or our) is an independent, global energy company with operations in the UK North Sea, US Gulf of Mexico, offshore Nigeria, Canada, Yemen, Colombia and Poland. Nexen is incorporated and domiciled in Canada and our head office is located at 801--7(th) Avenue SW, Calgary, Alberta, Canada. Nexen's shares are publicly traded on both the Toronto Stock Exchange and the New York Stock Exchange.

These Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2012 have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Specifically, they have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. The Unaudited Condensed Consolidated Financial Statements do not include all of the information required for annual financial statements and should be read in conjunction with the Audited Consolidated Financial Statements for the year ended December 31, 2011, which have been prepared in accordance with IFRS.

CNOOC Acquisition of Nexen

On July 23, 2012, Nexen and CNOOC Limited (CNOOC) entered into an Arrangement Agreement in which CNOOC proposed to acquire all of the outstanding shares of Nexen Inc. for US$27.50 per common share and Cdn$26.00 per preferred share. The transaction is proposed to be completed by way of a plan of arrangement (the "Arrangement") under the Canada Business Corporations Act.  On September 20, 2012, Nexen's common and preferred shareholders approved the Arrangement, and the Court of Queen's Bench of Alberta granted a final order approving the Arrangement. The closing of the Arrangement remains subject to the receipt of required regulatory approvals and the satisfaction or waiver of the other customary closing conditions.

The Unaudited Condensed Consolidated Financial Statements were authorized for issue by Nexen's Board of Directors on October 24, 2012.

2. ACCOUNTING POLICIES

The accounting policies we follow are described in Note 2 of the Audited Consolidated Financial Statements for the year ended December 31, 2011. There have been no changes to our accounting policies since December 31, 2011.

3. PROPERTY, PLANT AND EQUIPMENT (PP&E)

(a)  Carrying amount of PP&E


                                            Exploration           Assets      Producing                      
                                                    and            Under      Oil & Gas     Corporate
                                             Evaluation     Construction     Properties     and Other           Total

    Cost                                                                                                             

       As at December 31, 2011                    2,206            2,347         19,832           837          25,222

             Additions                              546              581          1,134            70           2,331

             Disposals/Derecognitions             (187)                -          (925)          (15)         (1,127)

             Transfers 1                              -          (1,862)          1,862             -               -

             Exploration Expense                  (264)                -              -             -           (264)

             Other                                  (6)                -             90            18             102

             Effect of Changes in                                                                            
    Exchange Rate                                  (39)             (32)          (375)           (7)           (453)

       As at September 30, 2012                   2,256            1,034         21,618           903          25,811

                                                                                                                     

    Accumulated Depreciation,                                                                                
    Depletion &
      Amortization (DD&A)                                                                                            

       As at December 31, 2011                      368                -          8,860           423           9,651

             DD&A                                    44                -          1,203            65           1,312

             Disposals/Derecognitions              (16)                -          (307)          (12)           (335)

             Other                                    -                -           (27)            17            (10)

             Effect of Changes in                                                                            
    Exchange Rate                                  (11)                -          (253)           (5)           (269)

       As at September 30, 2012                     385                -          9,476           488          10,349

                                                                                                                     

    Net Book Value                                                                                                   

       As at December 31, 2011                    1,838            2,347         10,972           414          15,571

       As at September 30, 2012                   1,871            1,034         12,142           415          15,462



(1   )Includes PP&E costs related to our Usan development, offshore Nigeria which came on-stream February 2012.

Exploration and evaluation assets mainly comprise of unproved properties and capitalized exploration drilling costs. Assets under construction at September 30, 2012 primarily include our developments in the UK North Sea.

(b)  Impairment

DD&A expense for the third quarter of 2011 includes non-cash impairment charges of $141 million for our Canadian coalbed methane and conventional gas assets. Sustained lower natural gas prices in the quarter reduced our estimates of fair value and resulted in impairment of the properties' carrying value.

4. LONG-TERM DEBT

During the three and nine months ended September 30, 2012, we borrowed and repaid nil and $254 million on our term credit facilities, respectively. We recorded $146 million and $136 million, respectively, of unrealized foreign exchange gains on long-term debt in other comprehensive income.

We have undrawn, committed, unsecured term credit facilities of $3.7 billion, of which $700 million is available until 2014 and $3.0 billion is available until 2017. As at September 30, 2012, $232 million of our term credit facilities were utilized to support letters of credit (December 31, 2011--$367 million).

Nexen has undrawn, uncommitted, unsecured credit facilities of approximately $180 million. We utilized $5 million of these facilities to support outstanding letters of credit at September 30, 2012 (December 31, 2011--$17 million).

Nexen has undrawn, uncommitted, unsecured credit facilities of approximately $207 million exclusively to support letters of credit. We utilized $16 million of these facilities to support outstanding letters of credit at September 30, 2012 (December 31, 2011--$4 million).

5. FINANCE EXPENSE


                                      Three Months              Nine Months
                                Ended September 30       Ended September 30

                                2012          2011       2012          2011

    Interest on                   75            73        223           231
    Long-Term Debt

    Accretion Expense             13            12         39            35
    Related to Asset
    Retirement
    Obligations

    Other Interest                 6             7         18            17
    and Fees

    Total                         94            92        280           283

          Less:                 (14)          (33)       (55)          (90)
    Capitalized at
    6.7% (2011
    -- 6.7%)

    Total                         80            59        225           193

                                                                   



Capitalized interest relates to and is included as part of the cost of our oil and gas properties. The capitalization rates are based on our weighted-average cost of borrowings.

6. EQUITY

(a)  Common Shares

Authorized share capital consists of an unlimited number of common shares of no par value. At September 30, 2012, there were 530,005,285 common shares outstanding (December 31, 2011--527,892,635 common shares).

(b)  Preferred Shares

Authorized share capital consists of an unlimited number of Class A preferred shares of no par value, issuable in series. At September 30, 2012, there were 8,000,000 Cumulative Redeemable Class A Rate Reset Preferred Shares, Series 2 outstanding (December 31, 2011--nil).

(c)  Earnings Per Common Share (EPS)

We calculate basic EPS using net income attributable to Nexen Inc. common shareholders, adjusted for preferred share dividends and divided by the weighted-average number of common shares outstanding. We calculate diluted EPS in the same manner as basic, except we adjust basic earnings for the potential conversion of the subordinated debentures and potential exercise of outstanding tandem options for shares, if dilutive. We use the weighted-average number of diluted common shares outstanding in the denominator of our diluted EPS calculation.






                                    Three Months              Nine Months
                                 Ended September       Ended September 30
                                              30

    (Cdn$ millions)              2012       2011       2012          2011

    Net Income                                                 
    Attributable to
    Nexen Inc. Common
    Shareholders                   59        200        339           654

          Preferred                                            
    Share Dividends
    Payable                       (3)          -        (6)             -

    Net Income                                                 
    Attributable to
    Nexen Inc. Common
         Shareholders,
    Basic                          56        200        333           654

          Potential                                            
    Tandem Options
    Exercises                       -       (29)          -          (39)

          Potential                                            
    Conversion of
    Subordinated
    Debentures                      -          6          -            19

    Net Income                                                 
    Attributable to
    Nexen Inc. Common
     
         Shareholders,
    Diluted                        56        177        333           634

                                                                         

    (millions of                                               
    shares)                                                              

    Weighted Average                                           
    Number of Common
    Shares
          Outstanding,
    Basic                         530        527        529           527

          Common                                               
    Shares Issuable
    Pursuant to Tandem
    Options                         -          2          -             2

          Common                                               
    Shares Notionally
    Purchased from
    Proceeds of
                Tandem
    Options                         -        (2)          -           (2)

          Common                                               
    Shares Issuable
    Pursuant to
    Potential
    Conversion
                of
    Subordinated
    Debentures                      -         23          -            20

    Weighted Average                                           
    Number of Common
    Shares
          Outstanding,
    Diluted                       530        550        529           547

                                                                 



In calculating the weighted-average number of diluted common shares outstanding and related earnings adjustments for the three and nine months ended September 30, 2012, we excluded 8,118,453 and 11,390,032 tandem options, respectively (2011--15,162,013 and 15,081,166, respectively) because their exercise price was greater than the average common share market price during those periods. During the three and nine months ended September 30, 2012, there were no dilutive instruments. During the three and nine months ended September 30, 2011, the potential conversion of tandem options and subordinated debentures were the only dilutive instruments.

(d)  Dividends

We paid dividends of $0.05 and $0.15 per common share, for the three and nine months ended September 30, 2012 ($0.05 and $0.15 per common share for the respective periods ended September 30, 2011).

We paid dividends of $0.3928 per preferred share, for the three and nine months ended September 30, 2012 (nil paid per preferred share for the respective periods ended September 30, 2011).

Dividends paid to holders of common and preferred shares have been designated as "eligible dividends" for Canadian tax purposes.

On October 24, 2012, the Board of Directors declared a quarterly dividend of $0.05 per common share, payable January 1, 2013 to the shareholders of record on December 10, 2012.

(e)  Stock-Based Compensation


                                    Three Months Ended September 30, 2012

    (thousands of             Options         STARs        RSUs        PSUs
    shares)

    Outstanding,               14,966        13,584       3,793         599
    Beginning of
    Period

      Granted                       -             -          23           -

      Exercised for             (107)             -           -           -
    Stock

      Exercised or              (510)         (822)         (1)           -
    Redeemed for
    Cash

      Cancelled                 (169)         (252)       (119)        (14)

      Expired                       -          (13)           -           -

    Outstanding,               14,180        12,497       3,696         585
    End of Period

                                                                       

                                    Nine Months Ended September 30, 2012

    (thousands of             Options         STARs        RSUs        PSUs
    shares)

    Outstanding,               14,854        14,407       2,025         390
    Beginning of
    Period

      Granted                   1,368           339       1,936         312

      Exercised for             (107)             -           -           -
    Stock

      Exercised or              (552)         (962)         (4)           -
    Redeemed for
    Cash

      Cancelled               (1,333)       (1,173)       (261)       (117)

      Expired                    (50)         (114)           -           -

    Outstanding,               14,180        12,497       3,696         585
    End of Period

                                                                           

    Exercisable,                7,710         8,729                        
    End of Period

                                                                       



Options and STARs granted in the nine months ended September 30, 2012 have a weighted average exercise price of $19.26/unit. No options or STARs were granted during the three months ended September 30, 2012. We recognized compensation expense related to share-based payments in the amount of $116 and $140 million (2011--compensation recovery $65 and $62 million) for the three and nine months ended September 30, 2012, respectively.

7. COMMITMENTS, CONTINGENCIES AND GUARANTEES

As described in Note 19 to the 2011 Audited Consolidated Financial Statements, there are a number of lawsuits and claims pending, the ultimate results of which cannot be ascertained at this time. We record costs as they are incurred or become determinable. We believe that payments, if any, related to existing indemnities would not have a material adverse effect on our liquidity, financial condition or results of operations.

We assume various contractual obligations and commitments in the normal course of our operations. During the quarter, we entered into drilling rig commitments comprised of the following:






                                2012         2013         2014         2015         2016     Thereafter

    Drilling                      17           60           23            9            -              -
    Rig
    Commitments



The commitments above are in addition to those included in Note 19 to the 2011 Audited Consolidated Financial Statements and Note 7 to the Unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2012 and June 30, 2012.

8. MARKETING AND OTHER INCOME


                                     Three Months              Nine Months
                               Ended September 30       Ended September 30

                               2012          2011       2012          2011

    Marketing                    35            72        210           174
    Revenue,
    Net

    Interest                     15             -         16             3
    Income

    Foreign                    (55)            30       (59)            14
    Exchange
    Gains
    (Losses)

    Change in                   (4)            13       (38)             6
    Fair Value
    of Crude
    Oil Put
    Options

    Insurance                     -             -          -            26
    Proceeds

    Other                        23            10         36            31

    Total                        14           125        165           254



9. CASH FLOWS

(a)  Charges and credits to income not involving cash


                                      Three Months              Nine Months
                                Ended September 30       Ended September 30

                                 2012         2011        2012         2011

    Depreciation,                 427          409       1,312        1,114
    Depletion,
    Amortization
    and Impairment

    Gain from                   (145)            -       (197)         (12)
    Dispositions

    Change in Fair                  4         (13)          38          (6)
    Value of Crude
    Oil Put Options

    Non-cash                      108         (65)         132         (67)
    Stock-Based
    Compensation
    (Recovery)

    Foreign                        51         (31)          59         (14)
    Exchange

    Provision for                   2         (43)        (22)           30
    (Recovery of)
    Deferred Income
    Taxes

    Loss on Debt                    -            -           -           91
    Redemption and
    Repurchase

    Non-Cash Items                  -            -           -        (290)
    Included in
    Discontinued
    Operations

    Other                          17            8          48           29

    Total                         464          265       1,370          875

                                                                    



(b)  Changes in non-cash working capital


                                      Three Months              Nine Months
                                Ended September 30       Ended September 30

                                 2012         2011        2012         2011

    Accounts                      294           61         807         (73)
    Receivable

    Inventories and             (105)          (3)        (65)          181
    Supplies

    Other Current                 (6)          (4)        (23)         (13)
    Assets

    Accounts                      143          114       (403)          283
    Payable and
    Accrued
    Liabilities

    Current Income              (255)        (297)         120           93
    Taxes Payable

    Total                          71        (129)         436          471

                                                                           

    Relating to:                                                           

          Operating               (4)        (198)         296          287
    Activities

          Investing                75           69         140          184
    Activities

    Total                          71        (129)         436          471

                                                                    



(c)  Other cash flow information


                                    Three Months              Nine Months
                                 Ended September       Ended September 30
                                              30

                                 2012       2011        2012         2011

    Interest                       89         88         237          218
    Paid

    Income                        527        646       1,024        1,106
    Taxes
    Paid



10. DISPOSITIONS

Asset Dispositions

Canadian Shale Gas Joint Venture

During the quarter, we closed the sale of a 40% working interest in our northeast British Columbia shale gas operations to INPEX Gas British Columbia Ltd. (IGBC). Upon closing we received $821 million in cash, comprised of the initial cash payment, the carry associated with Nexen's capital and IGBC's share of costs since the July 1, 2011 effective date of the transaction. We recorded a pre-tax gain on sale of $142 million on closing.

11. OPERATING SEGMENTS AND RELATED INFORMATION

Nexen has the following operating segments:

Conventional Oil and Gas: We explore for, develop and produce crude oil and natural gas from conventional sources around the world. Our operations are focused in the UK North Sea, North America (Canada and US) and other countries (offshore Nigeria, Colombia, Yemen and Poland).

Oil Sands: We develop and produce synthetic crude oil from the Athabasca oil sands in northern Alberta. We produce bitumen using in situ and mining technologies and upgrade it into synthetic crude oil before ultimate sale. Our in situ activities are comprised of our operations at Long Lake and future development phases. Our mining activities are conducted through our 7.23% ownership of the Syncrude Joint Venture.

Shale Gas: We explore for and produce unconventional gas from shale formations in northeast British Columbia. Production and results of operations are included within Conventional Oil and Gas until they become significant.

Corporate and Other includes energy marketing and unallocated items. The results of Canexus have been presented as discontinued operations.

The accounting policies of our operating segments are the same as those described in Note 2 of our Audited Consolidated Financial Statements for the year ended December 31, 2011. Net income (loss) of our operating segments excludes interest income, interest expense, income tax expense, unallocated corporate expenses and foreign exchange gains and losses. Identifiable assets are those used in the operations of the segments.

Segmented net income for the three months ended September 30, 2012


                                                                                                 Corporate                  
                                                                                                       and
                                                  Conventional                      Oil Sands        Other           Total

                                 United         North           Other          In                                           
                                Kingdom       America       Countries 1      Situ       Syncrude                          

                                                                                                                            

    Net Sales                       834            90             228         143            188        12           1,495  

    Marketing and Other                                                                                                     
    Income                           20             3               -           -              -       (9)              14

                                    854            93             228         143            188         3           1,509  

                                                                                                                            

    Less: Expenses                                                                                                          

       Operating                    111            42              37         131 2           75         5             401  

       Depreciation,                                                                                                        
    Depletion and
             Amortization           157            65             133          40             17        15             427

       Transportation and                                                                                                   
    Other                           (1)            14               -          66              6        43             128

       General and                                                                                         3                
    Administrative                   17            46              26          21              1       112             223

       Exploration                   11            28               9 4         1              -         -              49  

       Finance                        6             3               -           1              2        68              80  

       Gain from                                                                                                            
    Dispositions                    (2)         (143)               -           -              -         -           (145)

    Income (Loss) before                                                                                                    
       Income Taxes                 555            38              23       (117)             87     (240)             346

    Less: Provision for                                                                                                    5
    Income Taxes                                                                                                       287

    Net Income                                                                                                          59  

                                                                                                                            

    Capital Expenditures            270           178              89 6       217             67        10             831  



(1  )Includes results of operations in Nigeria, Yemen and Colombia.
(2  )Includes Long Lake turnaround costs of $49 million.
(3  )Includes non-cash stock-based compensation expense of $108 million.
(4) Includes exploration activities primarily in Colombia and Poland.
(5) Includes UK current tax expense of $278 million.
(6) Includes capital expenditures in Nigeria of $63 million.

Segmented net income for the three months ended September 30, 2011


                                                                                                 Corporate                  
                                                                                                       and
                                                     Conventional                   Oil Sands        Other           Total

                                 United         North           Other 1,       In                                           
                                Kingdom       America       Countries 2      Situ       Syncrude          

                                                                                                                            

    Net Sales                       756           112             185         146            185        15           1,399  

    Marketing and Other                                                                                                     
    Income                            -             4               5           -              2       114             125

                                    756           116             190         146            187       129           1,524  

                                                                                                                            

    Less: Expenses                                                                                                          

       Operating                    106            34              39          97             73         7             356  

       Depreciation,                                                                                                        
    Depletion,
             Amortization
    and Impairment                  124           210              18          30             16        11             409

       Transportation and                                                                                                   
    Other                             5            10               7          49              6        33             110

       General and                                                                                                          
    Administrative                  (7)             3               2         (1)              1        25              23

       Exploration                   15            17              27 3         -              -         -              59  

       Finance                        6             5               -           1              1        46              59  

    Income (Loss) before                                                                                                    
       Income Taxes                 507         (163)              97        (30)             90         7             508

    Less: Provision for                                                                                             
    Income Taxes                                                                                                       308 4

    Net Income                                                                                                         200  

                                                                                                                            

    Capital Expenditures            190           243             161 5        90             34        11             729  



(1  )Includes results of operations in Yemen and Colombia.
(2  )Includes Yemen Masila net sales of $138 million and net income before taxes of $52 million.
(3  )Includes exploration activities primarily in Norway, Colombia and Poland.
(4  )Includes UK current tax expense of $299 million.
(5  )Includes capital expenditures in Nigeria of $135 million.

Segmented net income for the nine months ended September 30, 2012


                                                                                                 Corporate                  
                                                                                                       and
                                                    Conventional                    Oil Sands        Other           Total

                                 United         North           Other          In                                           
                                Kingdom       America       Countries 1      Situ       Syncrude                          

                                                                                                                            

    Net Sales                     3,028           284             479         534            491        34           4,850  

    Marketing and Other                                                                                                     
    Income                           29             6               -           -              1       129             165

                                  3,057           290             479         534            492       163           5,015  

                                                                                                                            

    Less: Expenses                                                                                                          

       Operating                    324           127              89         352 2          206        18           1,116  

       Depreciation,                                                                                                        
    Depletion and
             Amortization           627           203             251         140             49        42           1,312

       Transportation and                                                                                                   
    Other                             4            30               -         194             18       107             353

       General and                                                                                         3                
    Administrative                   25            92              44          43              1       259             464

       Exploration                   41           205              17 4         1              -         -             264  

       Finance                       18            11               1           2              6       187             225  

       Gain from                                                                                                            
    Dispositions                    (2)         (156)             (7)        (32)              -         -           (197)

    Income (Loss) before                                                                                                    
       Income Taxes               2,020         (222)              84       (166)            212     (450)           1,478

    Less: Provision for                                                                                                    5
    Income Taxes                                                                                                     1,139

    Net Income                                                                                                         339  

                                                                                                                            

    Capital Expenditures            708           610             341 6       493            149        30           2,331  



(1  )Includes results of operations in Nigeria, Yemen and Colombia.
(2  )Includes Long Lake turnaround costs of $49 million.
(3  )Includes non-cash stock-based compensation expense of $132 million.
(4) Includes exploration activities primarily in Colombia and Poland, and recovery of previously expensed exploration costs in Norway.
(5) Includes UK current tax expense of $1,134 million.
(6) Includes capital expenditures in Nigeria of $250 million.

Segmented net income for the nine months ended September 30, 2011


                                                                                                  Corporate                  
                                                                                                        and
                                                     Conventional                    Oil Sands        Other           Total

                                 United         North           Other 1,        In                                           
                                Kingdom       America       Countries  2      Situ       Syncrude                          

                                                                                                                             

    Net Sales                     2,482           379             599          449            555        40           4,504  

    Marketing and Other                                                                                                      
    Income                            9            36              12            -              3       194             254

                                  2,491           415             611          449            558       234           4,758  

                                                                                                                             

    Less: Expenses                                                                                                           

       Operating                    265           110             109          331            223        22           1,060  

       Depreciation,                                                                                                         
    Depletion,
             Amortization
    and Impairment                  439           431              66           95             46        37           1,114

       Transportation and                                                                                                    
    Other                             5            25              23          118             18       100             289

       General and                                                                                                           
    Administrative                 (17)            55              25           12              1       128             204

       Exploration                   32           117             127 3          2              -         -             278  

       Finance                       16            13               1            2              4       157             193  

       Loss on Debt                                                                                                          
    Redemption                        -             -               -            -              -        91              91

       Gain from                                                                                                             
    Dispositions                    (8)             -               -            -              -       (4)            (12)

    Income (Loss) before                                                                                                     
       Income Taxes               1,759         (336)             260        (111)            266     (297)           1,541

    Less: Provision for                                                                                              
    Income Taxes                                                                                                      1,189 4

    Income from                                                                                                              
    Continuing Operations                                                                                               352

    Add: Net Income                                                                                                          
    from Discontinued
       Operations                                                                                                       302

    Net Income                                                                                                          654  

                                                                                                                             

    Capital Expenditures            368           485             478 5        310             80        37           1,758  



(1 )Includes results of operations in Yemen and Colombia.
(2 )Includes Yemen Masila net sales of $453 million and net income before taxes of $192 million.
(3 )Includes exploration activities primarily in Norway, Colombia and Poland.
(4 )Includes UK current tax expense of $1,047 million.
(5 )Includes capital expenditures in Nigeria of $349 million.

Segmented assets as at September 30, 2012


                                                                                       Corporate          
                                                                                             and
                                          Conventional                    Oil Sands        Other            Total

                       United         North           Other          In                                   
                      Kingdom       America       Countries        Situ       Syncrude                           

                                                                                                                 

    Total                                                                                        1        
    Assets              5,039         2,913           2,250       6,243          1,518     2,388           20,351

                                                                                                                 

    Property,                                                                                             
    Plant and
    Equipment                                                                                                    

       Cost             7,534         6,514           2,799       6,407          1,878       679           25,811

       Less:                                                                                              
    Accumulated
    DD&A                4,127         4,131             878         330            456       427           10,349

    Net Book                                2               3           4                                 
    Value               3,407         2,383           1,921       6,077          1,422       252           15,462



(1 )Includes cash of $1,039 million, and Energy Marketing accounts receivable, current derivative assets and inventory of $835 million.
(2 )Includes net book value of $827 million associated with our Canadian shale gas operations.
(3 )Includes net book value of $1,774 million related to our Usan development, offshore Nigeria.
(4 )Includes net book value of $5,228 million for Long Lake Phase 1 and $849 million for future phases of our in situ oil sands projects.

Segmented assets as at December 31, 2011


                                                                                       Corporate
                                                                                             and
                                          Conventional                    Oil Sands        Other            Total

                       United         North           Other          In
                      Kingdom       America       Countries        Situ       Syncrude                           

                                                                                                                 

    Total
    Assets              4,817         3,403           2,138       5,881          1,423     2,406 1         20,068

                                                                                                                 

    Property,
    Plant and
    Equipment                                                                                                    

       Cost             7,103         7,256           2,566       5,915          1,733       649           25,222

       Less:
    Accumulated
    DD&A                3,707         4,299             648         205            411       381            9,651

    Net Book
    Value               3,396         2,957 2         1,918 3     5,710 4        1,322       268           15,571



(1 )Includes cash of $453 million, and Energy Marketing accounts receivable, current derivative assets and inventory of $1,449 million.
(2 )Includes net book value of $1,293 million associated with our Canadian shale gas operations.
(3 )Includes net book value of $1,821 million related to our Usan development, offshore Nigeria.
(4 )Includes net book value of $5,050 million for Long Lake Phase 1 and $660 million for future phases of our in situ oil sands projects.

 

 

 

 

 

 

 

SOURCE Nexen Inc.