Nexen Inc., Calgary, (TSX, NYSE: NXY) has concluded a joint venture with China’s CNOOC Ltd. (NYSE: CEO) in the Gulf of Mexico. The joint venture will give CNOOC a working interest in up to six deepwater exploration wells in the Gulf. Among the prospects included in the deal are the Kakuna well, drilling at press time, and the Angel Fire well, expected to spud in 2012. CNOOC will participate in Kakuna, Angel Fire, and Cypress with a 20% working interest, and may participate in three additional exploration wells with a 10% to 25% working interest. The venture does not include any interest in the Appomattox discovery or related Norphlet formation prospects.

Nexen currently produces approximately 20,000 BOE equivalent per day in the Gulf of Mexico and is one of the top leaseholders in the deepwater Gulf. The company also has a significant discovery at Appomattox, containing at least 250 million bbl. of contingent recoverable resource, where it is currently drilling its first appraisal well. Nexen has a 20% interest in Appomattox; the remainder is held by Shell, who is the operator.

Separately, Nexen announced it has reached agreement to create a strategic partnership with a consortium led by

Inpex Corp. of Japan for the development of Nexen’s shale-gas assets in the Horn River, Cordova and Liard basins in northeast British Columbia. Nexen will sell a 40% working interest in its northeast B.C. assets and will remain the operator.

The total consideration for the sale is $700 million, with 50% upfront and a 50% capital carry. Closing is expected in first-quarter 2012. Following closing of the transaction, Nexen will hold a 60% interest in the joint-venture lands, and the remaining 40% will be owned through Inpex Gas British Columbia Ltd., which is jointly established by Inpex (82%) and JGC Corp. (18%). Bank of America Merrill Lynch is financial advisor to Nexen on the Inpex transaction.

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