Nexen profit bounces back to $171M

Nexen Inc. enjoyed a big bounce-back in net earnings in the first quarter compared with the final three months of 2011, but profits were still below those of a year ago and missed analyst expectations.

The Calgary oil and gas producer said net income in the quarter ended March 31 was $171 million or 32 cents per share.

That compared with $202 million or 38 cents per share in the same 2011 quarter.

Consolidated revenue was just under $1.7 billion, up from just under $1.6 billion in the prior-year period.

Analysts polled by Thomson Reuters were on average expecting earnings of 51 cents per share and revenues of more than $1.67 billion.

Still, the profit was a big rebound from the $43 million or eight cents per share it earned in the previous quarter when Nexen booked charges related to the next phase of its troubled Long Lake oilsands project.

In January, Nexen announced a major management shakeup, with Marvin Romanow leaving his post as CEO and Gary Nieuwenburg stepping down as the executive vice-president of the company's Canadian operations.

Kevin Reinhart, chief financial officer, has been appointed as interim president and CEO while the company searches for a permanent replacement for Romanow.

Nexen did not give a reason for the abrupt departures, but investors had clearly been losing patience with the company's Long Lake oilsands project in northern Alberta.

On Wednesday, the company announced that current board member Barry Jackson, a 37 year veteran of the oil and gas industry, has been appointed chairman to replaced Francis Saville, whose term has expired. Saville will remain a member of the board.

At Long Lake, steam is pumped deep underground to soften the thick, tarry bitumen so it can flow to the surface. The project is unique in that uses the dregs of each barrel of crude as a fuel source.

But the project has yet to come close to its design capacity of 72,000 barrels of bitumen per day due to a number of operational glitches.

Performance has been improving recently. Bitumen production from Long Lake's existing well pads averaged 34,500 barrels per day during the first quarter, a 10 per cent improvement from the last three months of 2011.

Regulators have given Nexen the go-ahead to drill more wells at Long Lake.

Nexen's original partner at Long Lake, Opti Canada, filed for court protection from creditors last summer and was later acquired by China National Offshore Oil Co. for $2.1 billion.