October 29, 2008 / 11:26 AM / in 10 years

UPDATE 2-Nexen profit jumps, CEO to retire by year-end

* Q3 EPS C$1.68, revenue $2.21 bln

* Q3 cash flow rose more than 94 pct

* Shares rise 17 pct

* Says CEO to retire at year-end (Recasts with additional details, comments; updates shares)

CALGARY, Alberta, Oct 29 (Reuters) - Third-quarter profit at Nexen Inc NXY.TO more than doubled on high oil prices, Canada’s No. 4 oil exploration company said on Wednesday, as it announced its chief executive will retire by year-end, and plans for retooling its trading division.

Nexen also denied a Financial Times report that the company, whose shares have fallen by more than half since the end of August, is being sized up by larger rivals interested in buying it.

“We have not been approached by anybody,” Charlie Fischer, Nexen’s chief executive said on a conference call. “In this environment, my guess is everybody is looking over their shoulder because valuations have changed so dramatically ... We’ll be looking for opportunities.”

Nexen, which officially opened its C$6.1 billion ($4.9 billion) Long Lake oil sands project last week, said it has worked to build up its cash and is in a position to acquire competitors even more battered by the credit crunch.

Martin Molyneaux, an analyst at FirstEnergy Capital, said Nexen could look at acquiring firms producing oil offshore Nigeria or supplementing its business in the North Sea.

“In the North Sea you’ve had a whole bunch of small companies explode,” Molyneaux said. “The opportunity suite (Nexen) has there is really incredible.”


Nexen’s third-quarter net income climbed to C$866 million, or C$1.68 a share, from C$403 million, or C$0.77 a share, in the prior-year quarter.

However the company said the profit included about 45 Canadian cents a share for a one-time gain on its stock-compensation costs.

Analysts had expected, on average, earnings of C$1.36 a share, according to Reuters Estimates.

Nexen, which benefited from oil prices that rose to a record high in the quarter, before dropping on recession fears, said cash flow rose more than 94 percent to C$1.70 billion, or C$3.20 a share, from C$868 million, or C$1.65 a share, a year earlier.

Oil and gas production, before royalties, fell 4.6 percent to 249,000 barrels of oil equivalent per day, as its output from Gulf of Mexico fields was slashed by hurricanes Gustav and Ike.

Revenue rose 53 percent to C$2.21 billion.

The Calgary-based firm, also announced on Wednesday that CEO Charlie Fischer will retire at the end of the year and will be replaced by Marvin Romanow, effective Jan. 1.

Romanow has been the company’s chief financial officer since 1998 and was promoted to executive vice-president in 2001, the company said.

Nexen also plans to pare back its marketing division, one of the largest among Canada’s senior oil and gas producers because of the economic crisis.

The marketing business will be used to support Nexen’s production operations, buying gas storage and pipeline space, while cutting its trading exposures and exiting positions that don’t support its business.

It also expects to trim capital spending next year but will not decide by how much until it completes its budget in December.

Nexen shares were up C$2.75, or 17 percent, at C$19.00 late Wednesday morning on the Toronto Stock Exchange, as oil prices firmed. ($1=$1.23 Canadian) (Reporting by Scott Haggett and Shradhha Sharma; editing by Rob Wilson)

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