February 17, 2011 / 3:44 AM / 7 years ago

UPDATE 1-Nexen Q4 profit drops with production

* Nexen EPS C$0.42

* Cash flow fell 34 percent

* Production down 3.4 percent after royalties

NEW YORK, Feb 16 (Reuters) - Nexen Inc’s fourth-quarter profit fell 15 percent as production dropped at Canada’s No. 5 independent oil explorer.

Nexen, which is struggling to lift output at its Long Lake oil sands project, said on Wednesday it earned C$220 million, or 42 Canadian cents a share, down from a year ago when it earned C$259 million, or 50 Canadian cents a share.

This was slightly behind the average analysts’ estimate of 43 Canadian cents a share, as surveyed by Thomson Reuters I/B/E/S.

Cash flow, a glimpse into the company’s ability to fund its development projects, fell 34 percent to C$549 million, or C$1.04 a share, from C$836 million, or C$1.60 a share.

Nexen said its results were hindered by production decreases stemming from downtime at one of its projects in the North Sea, natural declines in Yemen and the sale of its Canadian heavy oil properties .

Last week, Nexen warned that persistent production problems at Long Lake in Alberta may pull production at the facility below previous forecasts. Output from some wells was not climbing no matter how much steam it pumped into the bitumen reservoir, the company said.

Overall quarterly production at Nexen, which also has oil and gas projects in the Gulf of Mexico, North Sea, Nigeria and Yemen, averaged 227,000 barrels a day after royalties, down 3.4 percent from the year before.

Nexen shares closed up C$1.29 at C$23.36 on the Toronto Stock Exchange on Wednesday. That is about even with the price of a year ago. ($1=$0.99 Canadian)

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