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Nexen Inc. Business Information, Profile, and History

801 7th Avenue Southwest
T2P 3P7

Company Perspectives

From the ocean swells in the North Sea to the frosty north of Alberta's oil sands and desert heat of Yemen, our philosophy is to build sustainable businesses. Sustainable value comes from our solid core assets that provide superior returns and ongoing free cash flow. It also comes from strong development projects expected to generate attractive returns and high-impact exploration for long-term growth.

History of Nexen Inc.

Nexen Inc. ranks as the fourth largest oil and gas company in Canada, conducting its exploration and production activities in the Gulf of Mexico, the North Sea, Yemen, Canada, and off the shore of West Africa. Nexen also holds a 61.4 percent interest in Canexus Income Trust, which controls the company's former chemicals division, a manufacturer of sodium chlorate and chlor-alkali products, such as chlorine, caustic soda, and muriatic soda. Nexen also holds a 7.23 percent interest in Syncrude Canada Ltd., a partnership that mines shallow oil sands deposits in Alberta.


For decades, one of Canada's largest oil and gas companies was part of a Los Angeles-based conglomerate, Occidental Petroleum Corporation. Nexen was formed in mid-1971 when the crude oil, natural gas, and sulphur operations of Jefferson Lake Petrochemicals of Canada Ltd., which Occidental Petroleum had acquired in 1963, were combined with other Canadian crude oil, natural gas, and chemicals assets belonging to Occidental Petroleum, creating Canadian Occidental Petroleum Ltd., the name Nexen operated under during its first 30 years in business. When Canadian Occidental was formed, it joined a company that had recently established itself as one of the largest oil exploration firms in the world, a claim it could make after discovering massive reserves of oil in Libya in the late 1960s. Occidental Petroleum, and by extension Canadian Occidental, was the creation of a physician-turned-entrepreneur whom Forbes, in its April 11, 1994 issue, described as an "irrepressible autocrat," Armand Hammer.

Hammer did not found Occidental Petroleum, but his influence over the company was without rival. Through his aggressive expansion, he turned a little-known company into one of the largest conglomerates in the United States, creating an energy and chemicals behemoth with an eclectic array of interests built around its core businesses. Hammer was nearing retirement age when he first encountered Occidental Petroleum, having spent his career selling "medicinal" alcohol during Prohibition, dealing in Russian art, and breeding cattle, among various other pursuits. A search for a tax shelter in the mid-1950s brought him into contact with Occidental Petroleum, a struggling oil exploration company founded in 1920 that had a net worth of only $34,000 when Hammer came across the company. He invested $100,000 in two of the company's exploration wells that soon struck oil, convincing him to buy up Occidental Petroleum's share and install himself as chief executive officer in 1957. Hammer was nearly 60 years old at the time, taking the helm of a company he would expand aggressively for the next 30 years, holding sway as the "irrepressible autocrat" until his death at age 92.

Under Hammer's direction, Occidental Petroleum developed into a sprawling conglomerate, building its portfolio of energy and chemical assets as it delved into far-flung ventures, such as meat packing and film production. "Whenever Hammer got interested in oil shale or art or hybrid seed technology, the Soviet Union or China, Occidental Petroleum Corp. got interested, too," a Forbes reporter wrote in the magazine's May 27, 1991 issue, "even if any chance of a return on its money seemed remote." Hammer's appetite for expansion created what stood as the 16th largest company in the United States by the time of his death in 1990, when Occidental Petroleum boasted nearly $22 billion in revenue. The company was awash in debt, however, partly because of Hammer's insistence on borrowing money to keep the company's dividend payments high. When his successor, Ray R. Irani, took control of the company, the primary objective was to bring fiscal responsibility to the table and pare down $8.5 billion of debt, a goal embraced by Irani who announced he would sell off $3 billion in assets and reduce debt by 40 percent within two years. It was this emphasis on downsizing and streamlining that led to the separation of Occidental Petroleum and Canadian Occidental later in the decade, a breakup that was not entirely amicable.

Independence in 2000

By the end of the 1990s, Irani's restructuring efforts had reduced Occidental Petroleum to one-third its size at the beginning of the decade. Revenues stood at $7.8 billion. Canadian Occidental, led by President and CEO Victor Zaleschuk, posted nearly CAD 1.7 billion in revenue in 1999, deriving CAD 500 million of the total from its oil activities in Yemen. The Yemen assets, which comprised the 310,000-acre Masila field that produced 210,000 barrels of oil per day, was the single most important property in Canadian Occidental's portfolio, and it was coveted by Occidental Petroleum. Canadian Occidental, classified as the operator of the Masila Block, held a 52 percent interest in the property, while Occidental Petroleum held a 38 percent working interest in the field. In mid-1999, Occidental Petroleum revealed its desire to gain control of Canadian Occidental's interest in the Masila field, announcing it wanted to trade its 29.2 percent stake in Canadian Occidental, valued at an estimated $850 million, for full ownership of the Yemen assets. Canadian Occidental's management flatly rejected the offer, but Occidental Petroleum did not back away. The company reportedly approached rival oil companies in the United States and Canada, offering to assist in the takeover of Canadian Occidental in exchange for the Masila block, a strategy that failed because many rival companies were interested in Canadian Occidental for the same reason Occidental Petroleum was interested in the company: the 210,000 barrels per day being produced in Yemen. The discord between Canadian Occidental and its parent culminated in a shareholder vote in which Canadian Occidental shareholders were encouraged to approve a shareholder rights plan, a so-called poison pill, to fend off the advances of Occidental Petroleum. In February 2000, Canadian Occidental gained the support it needed to become independent. The following month, Occidental Petroleum sold its interest in Canadian Occidental to Canadian Occidental and a pension fund group, the Ontario Teachers' Pension Plan Board, for CAD 1.2 billion.

Canadian Occidental entered the 21st century as an independent company for the first time in its history. Following the company's separation from Occidental Petroleum, it searched for a new name, wanting to adopt a new identity to mark its separation from its parent. Zaleschuk, in a September 28, 2000 interview with Canadian Corporate News, explained the process of finding a new name for the company. "We looked at our entire business and asked for input from shareholders, staff, and consultants," he said. "Nexen, signifying a new energy, was the name we kept coming back to. Plus," he added, "it passed all of the international trademarking and linguistic checks."

The new Nexen corporate banner represented one of Canada's elite industrial concerns, an oil and gas giant with significant holdings in the chemicals business. At the heart of the company was the Yemen property, where oil was discovered on the first of 17 fields in 1991. Production at the Masila block commenced in 1993, yielding one million barrels of oil by the end of the year. Aside from Yemen, Nexen counted Canada and the U.S. Gulf of Mexico as its primary operating areas, although the company was involved in the exploration, development, production, and marketing of crude oil and natural gas in Nigeria, Australia, Columbia, and Indonesia as well. Its production in Canada was increased exponentially after the acquisition of Wascana Energy Inc., a CAD 1.9 billion deal that tripled production in its home country. The company derived 80 percent of its energy-related revenue from the production of oil and 20 percent from the production of natural gas. Nexen's chemicals business, which accounted for CAD 242 million of the company's CAD 1.7 billion in revenue in 1999, consisted of the manufacture and marketing of sodium chlorate, chlorine, and caustic soda. The company's chemical business established its first presence outside North America in 1999 through the acquisition of sodium chlorate facilities in Brazil.

Several months after adopting a new corporate title, Nexen gained a new leader. Charlie Fischer replaced Zaleschuk as president and chief executive officer in June 2001, completing his rise through Nexen's executive ranks which began in 1994 with his appointment as senior vice-president in charge of exploration and production in North America. Fischer inherited 37 million acres of land when he took the helm, and he promised to use it to double the company's size within five years, growth he intended to achieve largely without the aid of acquisitions. Fischer, as the November 19, 2001 issue of the Oil and Gas Journal noted, planned to grow "through the aggressive use of the drill bit."

Rapid Expansion in the 21st Century

The first years of the 21st century were highlighted by sound financial performance and promising oil discoveries that pointed toward a profitable future for the Calgary-based company. The fields in Yemen continued to underpin the company's financial growth, producing their 700 millionth barrel of oil in mid-2003, a year, not coincidentally, that resulted in record high net income of CAD 578 million. Nexen, by this point, ranked as the fourth largest oil exploration and production company in Canada, producing more than 220,000 barrels of oil per day from its worldwide operations.

As Nexen neared its 35th anniversary, the company's prospects were brightened by several significant moves. In 2004, the company entered the U.K. North Sea through a $2.1 billion acquisition that gave it access to the Buzzard field development, the region's largest discovery in a decade. Nexen, with a 43 percent interest in the project, operated as the lead partner, directing its efforts on the Scott and Telford fields. The acquisition prompted the company to announce a disposition plan in October 2004 to reduce its debt by CAD 1.5 billion. The plan, executed in 2005, consisted of spinning off its chemicals division as an income trust fund named Canexus Income Trust through an initial public offering of stock. The spinoff, valued at an estimated CAD 800 million, left Nexen with a 61.4 percent interest in Canexus.

The substantial boost to production resulting from expanding into the North Sea was followed by two promising events. In late 2005, industry observers reported what promised to be a massive oil field at Nexen's Knotty Head development in the U.S. Gulf of Mexico. Analysts estimated the field to contain 500 million barrels of oil in what ranked as the deepest well drilled in the Gulf. Nexen held a 25 percent stake in the project. In early 2006, Nexen approved a plan to develop the Ettrick field in the North Sea, where it maintained an 80 percent stake in a field estimated to have recoverable reserves of roughly 40 million barrels of oil in addition to natural gas. The company planned to drill three production wells, which were expected to begin producing in 2008. "This is a solid project that adds certainty to our production profile beyond 2007," Fischer commented in a February 22, 2006 interview with Europe Intelligence Wire. "The North Sea is important to our overall growth strategy and Ettrick is a stepping stone to growing a sustainable business in this area." As Fischer looked ahead, there was every indication that his stewardship of the company's assets would result in a legacy of success. Nexen, in an encouraging pattern, posted record high net income in 2004 of CAD 793 million. In 2005, with revenues nearing CAD 5 billion, the company registered an all-time high for the third consecutive year, eclipsing the CAD 1 billion mark for a total of CAD 1.15 billion in net income.

Principal Subsidiaries

Nexen Marketing International Ltd. (Barbados); Nexen Marketing Singapore Pte. Ltd.; Nexen Marketing U.S.A. Inc.; Nexen Petroleum Canada; Nexen Petroleum Offshore U.S.A. Inc.; Nexen Petroleum U.S.A. Inc.; Canadian Nexen Petroleum Yemen; Nexen E & P Services Nigeria Limited; Nexen Ettrick U.K. Limited; Nexen Exploration U.K. Limited: Nexen Petroleum Columbia Limited; Nexen Petroleum do Brasil Ltda. (Brazil); Nexen Petroleum Equatorial Guinea Limited; Nexen Petroleum Nigeria Limited; Nexen Petroleum U.K. Limited; Nexen Chemicals U.S.A.; Nexen Exploration Norge AS (Norway).

Principal Competitors

BP p.l.c.; Exxon Mobil Corporation; Petro-Canada Limited.


  • Key Dates
  • 1971 Canadian Occidental Petroleum Ltd., Nexen's predecessor, is formed by Occidental Petroleum Corporation.
  • 1991 Canadian Occidental's prime asset, an oil field in Yemen, is discovered.
  • 1997 Canadian Occidental's Canadian oil production triples with the acquisition of Wascana Energy Inc.
  • 2000 Occidental Petroleum sells its stake in Canadian Occidental.
  • 2001 Charlie Fischer is named president and chief executive officer.
  • 2004 Through a $2.1 billion acquisition, Nexen begins production in the U.K. North Sea.
  • 2005 Nexen spins off its chemicals division as Canexus Income Trust.
  • 2006 Nexen moves forward with the development of the Ettrick field in the North Sea.

Additional topics

Company HistoryOil & Natural Gas Extraction

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