Blackmont Capital: Expect Nexen Earnings Above Consensus Estimates

While slightly lower oil prices in the first quarter and higher natural gas prices will impact Nexen Inc.’s (NXY) first quarter earnings results, due out before markets open on Thursday morning, there are two other items investors should look out for.

Those are details about the company’s production increase at its Buzzard project in the North Sea and the commissioning of facilities at Long Lake, says Blackmont Capital analyst Menno Hulshof.

Buzzard, the huge deposit that Nexen has a 43% working interest in, started production oil in January 2007.

The Long Lake property, roughly 40 kilometers southeast of Fort McMurray in the Athabasca oil sands region in northeastern Alberta, is being developed using steam-assisted-gravity-drainage [SAGD] for bitumen production.

Nexen has a 50% working interest in the joint venture with OPTI Canada Inc.

Mr. Hulshof expects Nexen’s cash flow and earnings will come in higher than consensus estimates, while forecasting total production of 254,700 barrels of energy per day, primarily from gains at Buzzard.

He has a “hold” rating on Nexen and a C$78 price target, representing upside in the C$10 range.

However, he continues to favor EnCana Corp. (ECA).

But if Nexen shares fall below C$67, Mr. Hulshof recommends aggressive buying.