Canada's Nexen and Cnooc form Gulf of Mexico joint venture

Nexen Inc, Canada's sixth-largest oil producer and China National Offshore Oil Corporation (Cnooc), have formed a joint venture that gives Cnooc a stake in up to six deepwater exploration wells in the Gulf of Mexico.

The deal comes less than a week after China's largest offshore oil producer became Nexen's partner in the Long Lake oil-sands project in Alberta through its $2.1-billion acquisition of OPTI Canada Inc.(See: Cnooc closes C$2.1-bn acquisition of oil sands operator Opti Canada).

Nexen said Cnooc will participate in the Kakuna, Angel Fire, and Cypress wells with a 20-per cent working interest, and may also participate in three more exploration wells with a 10 to 25 per cent working interest.

The JV does not include any interest in its Appomattox discovery or related Norphlet formation prospects, Nexen said in a statement.

"This agreement is the culmination of an extensive process to recognise some of the value our exploration team has created in the Gulf of Mexico," said Marvin Romanow, Nexen's president and CEO. "We are seeing a gradual return to normal activity in the Gulf and this deal is a reflection of the fact that the basin remains a very exciting one for deepwater exploration prospects."

Nexen currently produces approximately 20,000 barrels of oil equivalent per day in the Gulf of Mexico and is one of the top leaseholders in the deepwater Gulf.