(Reuters) - Nexen Inc NXY.TO, Canada’s fifth-largest independent oil producer, warned that full-year production would miss its own expectations, and reported a drop of almost two-thirds in quarterly profit on lower production rates at some assets.
Production in the current fourth quarter should be helped as volumes at its North Sea Buzzard field are set to increase with the addition of a fourth platform, but Nexen may wind down its operations in Yemen if it doesn’t get an extension on its Masila contract before December 17, when the contract expires.
Nexen now expects fourth-quarter production rates to average 200,000-230,000 barrels of oil equivalent per day (mboe/d), with average full-year production seen at 200-215 mboe/d, lower than previously planned.
Separately, the company said Britain’s Department of Energy and Climate Change cleared the development of the Golden Eagle area in the North Sea. The area is expected to produce about 140 million barrels of oil equivalent of proved and probable reserves over 18 years. First oil production is expected in late 2014.
July-September earnings slumped to C$200 million ($196.8 million), or 32 Canadian cents per share, from C$581 million, or C$1.07, a year ago.
The company said cash flow -- a key indicator of its ability to fund new drilling and projects -- fell 14 percent to C$516 million. Revenue rose 6 percent to C$1.52 billion.
Production in the quarter was mainly hit by the longer-than-expected time taken to commission the fourth platform at Buzzard, and weather-related issues in the Gulf of Mexico.
Nexen said production at Buzzard is back up to speed and field production was at 208,000 boe/d in October.
Production before royalties fell 22 percent to 186,000 boe/d.
Analysts on average had forecast third-quarter earnings of 32 Canadian cents per share on revenue of C$1.49 billion, according to Thomson Reuters I/B/E/S.
Along with conventional oil and gas production in Western Canada and the Buzzard field, Nexen operates the struggling Long Lake oil sands project in northern Alberta, and has interests in Yemen, the Gulf of Mexico and offshore west Africa.
($1 = 1.016 Canadian Dollars)
Reporting by Abhiram Nandakumar in Bangalore; Editing by Joyjeet Das