Nexen Cooperates Shell In The Gulf Of Mexico

Nexen Inc. has entered into an agreement with Shell Exploration and Production Company to jointly explore a 1,044 square mile area of the Continental Shelf of the Gulf of Mexico for natural gas in Miocene reservoirs.

The area of mutual interest (AMI) outlined in the agreement consists of 116 blocks located in Ship Shoal and South Timbalier. Within this area, Nexen has the right to earn a 40% working interest in any acreage acquired by SEPCo and SEPCo has the right to earn a 60% interest in any acreage acquired by Nexen.

The first well drilled under the agreement will be a test of the Fergana prospect located on South Timbalier 239 and 248 blocks, approximately 115 miles south of New Orleans in 210 feet of water. Under the terms of the participation agreement, Nexen will earn a 40% interest in Fergana. Drilling operations are expected to commence in late-May and the well is expected to take approximately 140 days to reach a total depth of 22,500 feet.

"Deep Miocene gas is an emerging high-potential play in the Gulf of Mexico and we are pleased to be partnered with the leading explorer in this area," said Charlie Fischer, Nexen's President and CEO.

"We believe the deep Miocene offers deep-water type reserve potential with the added advantage that discoveries can be brought on-line quickly due to the abundance of infrastructure available on the Shelf. It provides an excellent complement to our successful deep-water program."

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