January 10, 2012 / 2:07 AM / 6 years ago

Nexen CEO resigns; Long Lake project in focus

(Reuters) - Nexen Inc NXY.TO said its Chief Executive Marvin Romanow is leaving the Canadian independent oil producer effective immediately and Chief Financial Officer Kevin Reinhart will serve as interim CEO.

The company is conducting a search for a new CEO, Nexen said in a statement. Nexen spokeswoman Patti Lewis declined to comment on the management change and said the company would offer further details on Tuesday.

Gary Nieuwenburg, executive vice president of Nexen Canada, is also leaving the company effective immediately, Nexen said.

Nexen’s board felt it was time for change and new leadership, and that there wasn’t one specific factor that led to these executive changes, FirstEnergy Capital analyst Michael Dunn said in a note.

“However, given the level of association and involvement of Messrs. Romanow and Nieuwenburg with the Long Lake project, it is safe to assume that continued disappointments there played a role in these departures,” Dunn said.

Nexen’s C$6.1 billion Long Lake project in northern Alberta has never come close to producing at its nameplate capacity of 72,000 barrels of oil per day due to a series of technical and operating issues.

Nexen holds 65 percent of Long Lake, while China’s top offshore oil company, CNOOC Ltd (0883.HK) holds the remaining stake. Nexen has been forced to spend billions of dollars to fix the poorly performing project.

Nexen, which also failed to renew its license to operate in Yemen, has seen its shares fall 21.6 percent over the past 12 months, compared with a 13 percent drop in the Toronto Stock Exchange’s oil and gas group index. .SPTTEN.

While investors have pressed the company to take fast steps to improve the share price, Romanow looked mostly to longer-term prospects to raise the company’s production and profits.

Those prospects include new output from a West African oil field, improved performance from Long Lake and the eventual development of its promising Gulf of Mexico discoveries.

Romanow did not offer investors more immediate remedies, though the company has looked for a partner to buy into its shale gas assets in northern British Columbia and last year quietly mulled selling the entire company.

In November, Nexen forecast 2012 output of 185,000-220,000 barrels of oil equivalent a day before royalties, compared with 200,000-215,000 bpd in 2011.

The possible fall in production is primarily due to Nexen’s exit from Yemen after 18 years in the country.

The company is also planning on higher production from its North Sea assets, which include the Buzzard field and the Golden Eagle discovery.

Shares of the company closed at C$17.07 on Monday on the Toronto Stock Exchange.

Reporting by Scott Haggett in CALGARY, Saqib Iqbal Ahmed and Ankur Banerjee in BANGALORE; Editing by Richard Chang and Vinu Pilakkott

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