Nexen shares jump after CEO replaced
By Scott Haggett
CALGARY, Alberta (Reuters) - Shares of Nexen Inc NXY.TO surged nearly 8 percent on Tuesday, as investors bet that a management shakeup would solve lingering operational woes at the Canadian oil and gas company
Nexen shares rose C$1.33 to C$18.40 on the Toronto Stock Exchange a day after the company announced it was replacing Chief Executive Marvin Romanow and the head of its domestic operations.
The rise underscored investor expectations that the beaten-down shares would push even higher under new management, after Romanow failed to live up to promises he could fix a number of costly operational issues.
"Investors had lost faith in the company," said Andrew Potter, an analyst with CIBC World Markets. "A lot of this is about credibility and being able to believe the plans management puts forward. That improves with a new management team coming in."
Romanow, 55, was installed as chief executive at the beginning of 2009 after serving 11 years as chief financial officer of the company, which operates in Canada, the Gulf of Mexico, the North Sea and elsewhere.
After Romanow took over, Nexen was plagued by a series of operating problems, though many were outside management's control. The setbacks included a delay in developing its promising Gulf of Mexico discoveries in the wake of 2010's BP Plc (BP.L: Quote) disaster. As well, it was forced to abandon a key Yemen oilfield after civil unrest hampered negotiations on renewing its operating license.
But Nexen's biggest problem has been its poorly performing Long Lake oil sands project in northern Alberta.
The C$6.1 billion ($6 billion) project has suffered through a series of operating and technical difficulties and Romanow was unable to boost production to anywhere near its 72,000 barrel per day capacity, despite spending hundreds of million of dollars to fix the glitches. Continued...