CALGARY, Alberta (Reuters) - Nexen Inc's NXY.TO first-quarter profit jumped fivefold due to record crude prices and higher production from its Buzzard field in the North Sea, Canada's No. 4 independent oil explorer said on Tuesday.
Nexen, which is nearing first production at the C$6.1 billion Long Lake oil sands project in Alberta, also doubled its quarterly dividend to 5 Canadian cents a share now that much of its major capital spending is behind it.
The strong results come on the heels of a disappointing 2007, when the company failed to meet its production targets.
"We are well-positioned to deliver on our commitments and 2008 is on track to be our best year ever," Chief Executive Charlie Fischer said at the annual meeting.
Nexen, which has a 50 percent stake in Long Lake, said construction there is done and it expects synthetic output to start later this year. Production from this phase will eventually hit 60,000 barrels a day.
By the end of this year, Nexen and partner OPTI Canada Inc OPC.TO could make a decision on going ahead with a second phase, Fischer said.
In the quarter, Nexen, which also operates in the U.S. Gulf of Mexico, Yemen and offshore West Africa, earned C$630 million, or C$1.19 a share, up from year-earlier C$121 million, or 23 Canadian cents a share.
Analysts surveyed by Reuters Estimates, on average, had forecast earnings of C$1 a share.
Cash flow, a glimpse into an oil company's ability to fund development projects, was C$1.04 billion, or C$1.96 a share, up 74 percent from C$598 million, or C$1.14 a share.
Revenue rose to C$1.87 billion from C$1.14 billion.
Nexen shares fell 90 Canadian cents, or more than 2 percent, to C$35.71 on the Toronto Stock Exchange on Tuesday, with the overall TSX energy subgroup down by the same percentage amid a drop in oil prices.
In the quarter, Nexen and its industry peers have benefited from oil prices that averaged a record near $98 a barrel in the first quarter, up 68 percent from the year before. Crude has since climbed even higher to near $120 a barrel.
Nexen sold its crude for an average C$93 a barrel, up 51 percent from the first quarter of 2007. Its average natural gas price rose 5 percent to C$7.98 per thousand cubic feet.
The company produced 222,000 barrels of oil equivalent a day after royalties, up 16 percent from last year. It expects to meet its 2008 production target of between 260,000 barrels and 280,000 barrels a day.
Much of the gain in the quarter was due to the 43-percent-owned Buzzard field, where production averaged 212,000 barrels a day, it said.
This weekend, Nexen was forced to shut down its North Sea output due to a two-day refinery strike that led to the outage of the key Forties pipeline to Scotland.
The company said on Tuesday it is restarting its production and will reach full rates when the pipeline is pumping at capacity.
Meanwhile, Fischer said Nexen plans to restart spending on its Alberta coalbed methane project after the Alberta government made tweaks this month to its new royalty system under the heading of dealing with "unintended consequences."
The company had slowed the project down, arguing that the royalty changes hampered its viability. It hopes to increase output to 150 million cubic feet a day by 2011.
It currently produces 40 million cubic feet a day.
Additional reporting by Scott Anderson; editing by Rob Wilson