22. Operating Segments and Related Information


Nexen has the following operating segments in various industries and geographic locations:

Oil and Gas: We explore for, develop and produce crude oil, natural gas and related products around the world. We manage our operations to reflect differences in the regulatory environments and risk factors for each country. Our core operations are onshore in Yemen and Canada, and offshore in the US Gulf of Mexico and the UK North Sea. Our other operations are primarily in Colombia, offshore West Africa and Norway.

Energy Marketing: Our energy marketing group sells our crude oil and natural gas, markets third-party crude oil, natural gas, NGLs and power (including electricity generation) and engages in energy trading.

Syncrude: We own 7.23% of the Syncrude Joint Venture, which develops and produces synthetic crude oil from mining bitumen in the Athabasca oil sands in northern Alberta.

Chemicals: Through our investment in Canexus, we manufacture, market and distribute industrial chemicals, principally sodium chlorate, chlorine, muriatic acid and caustic soda. We produce sodium chlorate at four facilities in Canada and one in Brazil. We produce chlorine, caustic soda and muriatic acid at chlor-alkali facilities in Canada and Brazil.

The accounting policies of our operating segments are the same as those described in Note 1. Net income of our operating segments excludes interest income, interest expense, unallocated corporate expenses and foreign exchange gains and losses with the exception of Chemicals. Identifiable assets are those used in the operations of the segments.

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2008 Operating and Geographic Segments

 

 

 

 

 

 

Oil and Gas

Energy Marketing

Syncrude

Chemicals

Corporate and Other

Total

(Cdn$ millions)

Yemen

Canada

US

UK

Other Countries1

 

 

 

 

 

1

Includes results of operations from producing activities in Colombia.

2

Net sales made from all segments originating in Canada:

1,570

 

PP&E located in Canada:

8,121

3

Net sales for our chemicals operations include:

 

Canada

153

 

US

214

 

Brazil

 110

 

Total

 477

4

Includes interest income of $28 million, foreign exchange gains of $128 million, increase in the fair value of crude oil put options of $203 million and other income of $7 million.

5

Includes an impairment charge related to oil and gas properties in the UK North Sea and the US Gulf of Mexico of $318 million and $250 million, respectively.

6

Includes recovery of stock-based compensation expense of $160 million.

7

Includes exploration activities primarily in Norway and Colombia.

8

The provision for (recovery of) income taxes for foreign locations is based on in-country taxes on foreign income. For oil and gas locations with no operating activities, the provision is based on the tax jurisdiction of the entity performing the activity.

9

Includes costs of $4,742 million related to our insitu oil sands (Long Lake and future phases).

10

79% of Marketing’s identifiable assets are accounts receivable and inventories.

Net Sales2

1,093

656

665

3,580

192

70

691

4773

–

7,424

Marketing and Other

12

3

4

5

–

467

6

(50)

3664

813

 

1,105

659

669

3,585

192

537

697

427

366

8,237

Less: Expenses

 

 

 

 

 

 

 

 

 

 

Operating

176

182

94

253

10

43

280

297

–

1,335

Depreciation, Depletion, Amortization and Impairments5

160

208

475

999

17

19

49

44

43

2,014

Transportation and Other

9

12

3

19

–

805

16

55

48

967

General and Administrative6

(7)

20

38

(8)

13

79

1

33

88

257

Exploration

5

79

109

86

1237

–

–

–

–

402

Interest

–

–

–

–

–

–

–

12

82

94

Income (Loss) before Income Taxes

762

158

(50)

2,236

29

(409)

351

(14)

105

3,168

Less: Provision for (Recovery of) Income Taxes8

264

45

(19)

1,126

(4)

(102)

99

2

46

1,457

Net Income (Loss)

498

113

(31)

1,110

33

(307)

252

(16)

59

1,711

Non-Controlling Interests

–

–

–

–

–

–

–

(4)

–

(4)

Net Income (Loss)

498

113

(31)

1,110

33

(307)

252

(12)

59

1,715

 

 

 

 

 

 

 

 

 

 

 

Identifiable Assets

342

6,6439

2,044

6,632

701

3,28010

1,198

573

742

22,155

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

 

 

 

 

 

 

 

 

 

Development and Other

92

1,180

251

545

190

8

55

88

53

2,462

Exploration

9

225

154

146

48

–

–

–

–

582

Proved Property Acquisitions

–

22

–

–

–

–

–

–

–

22

Total

101

1,427

405

691

238

8

55

88

53

3,066

 

 

 

 

 

 

 

 

 

 

 

PP&E

 

 

 

 

 

 

 

 

 

 

Cost

2,808

8,134

4,398

6,532

554

246

1,372

940

331

25,315

Less: Accumulated DD&A

2,610

1,786

2,702

2,159

113

76

236

507

204

10,393

Net Book Value2

198

6,3489

1,696

4,373

441

170

1,136

433

127

14,922

 

 

 

 

 

 

 

 

 

 

 

Goodwill

–

–

–

341

–

49

–

–

–

390

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2007 Operating and Geographic Segments

 

 

 

 

 

 

Oil and Gas

Energy Marketing

Syncrude

Chemicals

Corporate and Other

Total

(Cdn$ millions)

Yemen

Canada

US

UK

Other Countries1

 

 

 

 

 

1

Includes results of operations from producing activities in Colombia.

2

Net sales made from all segments originating in Canada:

 1,188

 

PP&E located in Canada:

6,893

3

Net sales for our chemicals operations include:

 

Canada

154

 

US

169

 

Brazil

91

 

Total

414

4

Includes interest income of $39 million, foreign exchange losses of $22 million and decrease in the fair value of crude oil put options of $43 million.

5

Includes an impairment charge of $366 million related to oil and gas properties in the Gulf of Mexico.

6

Includes stock-based compensation expense of $38 million.

7

Includes exploration activities primarily in Nigeria, Norway and Colombia.

8

The provision for (recovery of) income taxes for foreign locations is based on in-country taxes on foreign income. For oil and gas locations with no operating activities, the provision is based on the tax jurisdiction of the entity performing the activity.

9

Includes costs of $3,695 million related to our insitu oil sands (Long Lake and future phases).

10

84% of Marketing’s identifiable assets are accounts receivable and inventories.

11

Includes acquisition of producing properties in the Gulf of Mexico.

12

Includes acquisition of additional interests in the Scott and Telford fields.

Net Sales2

1,086

441

616

2,285

148

48

545

4143

–

5,583

Marketing and Other

10

6

–

39

–

959

–

33

(26)4

1,021

 

1,096

447

616

2,324

148

1,007

545

447

(26)

6,604

Less: Expenses

 

 

 

 

 

 

 

 

 

 

Operating

171

173

102

212

8

34

208

257

–

1,165

Depreciation, Depletion, Amortization and Impairment

213

166

6415

599

8

13

53

45

29

1,767

Transportation and Other

8

22

–

–

–

806

17

39

16

908

General and Administrative6

(6)

50

38

3

40

87

1

31

130

374

Exploration

5

27

134

69

917

–

–

–

–

326

Interest

–

–

–

–

–

–

–

11

157

168

Income (Loss) before Income Taxes

705

9

(299)

1,441

1

67

266

64

(358)

1,896

Less: Provision for (Recovery of) Income Taxes8

248

3

(103)

712

–

21

75

18

(182)

792

Net Income (Loss)

457

6

(196)

729

1

46

191

46

(176)

1,104

Non-Controlling Interests

–

–

–

–

–

–

–

18

–

18

Net Income (Loss)

457

6

(196)

729

1

46

191

28

(176)

1,086

 

 

 

 

 

 

 

 

 

 

 

Identifiable Assets

359

5,3799

1,640

4,642

317

3,66310

1,212

487

376

18,075

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

 

 

 

 

 

 

 

 

 

Development and Other

124

1,381

414

551

53

4

36

62

52

2,677

Exploration

12

123

275

119

44

–

–

–

–

573

Proved Property Acquisitions

–

1

10411

4612

–

–

–

–

–

151

Total

136

1,505

793

716

97

4

36

62

52

3,401

 

 

 

 

 

 

 

 

 

 

 

PP&E

 

 

 

 

 

 

 

 

 

 

Cost

2,178

6,736

3,069

4,723

263

246

1,332

831

315

19,693

Less: Accumulated DD&A

1,950

1,597

1,765

908

77

62

205

463

168

7,195

Net Book Value2

228

5,1399

1,304

3,815

186

184

1,127

368

147

12,498

 

 

 

 

 

 

 

 

 

 

 

Goodwill

–

–

–

276

–

50

–

–

–

326

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2006 Operating and Geographic Segments

 

 

 

 

 

 

Oil and Gas

Energy Marketing

Syncrude

Chemicals

Corporate and Other

Total

(Cdn$ millions)

Yemen

Canada

US

UK

Other Countries1

 

 

 

 

 

1

Includes results of operations from producing activities in Colombia.

2

Net sales made from all segments originating in Canada:

1,095

 

PP&E located in Canada:

5,483

3

Net sales for our chemicals operations include:

 

Canada

139

 

US

185

 

Brazil

83

 

Total

407

4

Includes $80 million of business interruption insurance proceeds related to production losses caused by Gulf of Mexico hurricanes in 2005.

5

Includes $74 million of business interruption insurance proceeds for generator failures in 2005.

6

Includes interest income of $36 million, foreign exchange losses of $72 million and decrease in the fair value of crude oil put options of $11 million.

7

Includes an impairment charge of $93 million, primarily relating to two natural gas properties in the Gulf of Mexico.

8

Includes $151 million (US$135 million) accrual with respect to the Block 51 arbitration settlement.

9

Includes stock-based compensation expense of $210 million.

10

Includes exploration activities primarily in Nigeria, Norway and Colombia.

11

The provision for (recovery of) income taxes for foreign locations is based on in-country taxes on foreign income. For oil and gas locations with no operating activities, the provision is based on the tax jurisdiction of the entity performing the activity.

12

Includes future income tax expense of $277 million related to an increase in the supplemental tax rate on oil and gas activities in the United Kingdom (see Note 18).

13

Includes costs of $2,444 million related to our insitu oil sands (Long Lake and future phases).

14

80% of Marketing’s identifiable assets are accounts receivable and inventories.

Net Sales2

1,328

459

629

477

139

51

446

4073

–

3,936

Marketing and Other

8

7

814

855

1

1,309

–

6

(47)6

1,450

 

1,336

466

710

562

140

1,360

446

413

(47)

5,386

Less: Expenses

 

 

 

 

 

 

 

 

 

 

Operating

151

143

106

80

8

31

187

249

–

955

Depreciation, Depletion, Amortization and Impairment7

327

162

296

216

10

12

33

40

28

1,124

Transportation and Other

6

33

–

–

1

789

18

40

1548

1,041

General and Administrative9

17

80

58

14

44

112

1

29

200

555

Exploration

4

26

214

46

7210

–

–

–

–

362

Interest

–

–

–

–

–

–

–

11

42

53

Income (Loss) before Income Taxes

831

22

36

206

5

416

207

44

(471)

1,296

Less: Provision for (Recovery of) Income Taxes11

289

7

13

37812

1

151

66

15

(237)

683

Net Income (Loss)

542

15

23

(172)

4

265

141

29

(234)

613

Non-Controlling Interests

–

–

–

–

–

–

–

12

–

12

Net Income (Loss)

542

15

23

(172)

4

265

141

17

(234)

601

 

 

 

 

 

 

 

 

 

 

 

Identifiable Assets

464

3,92313

1,620

5,490

245

3,52814

1,186

459

241

17,156

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

 

 

 

 

 

 

 

 

 

Development and Other

145

1,434

418

596

28

47

86

27

45

2,826

Exploration

37

163

177

62

52

–

–

–

–

491

Proved Property Acquisitions

–

12

–

1

–

–

–

–

–

13

Total

182

1,609

595

659

80

47

86

27

45

3,330

 

 

 

 

 

 

 

 

 

 

 

PP&E

 

 

 

 

 

 

 

 

 

 

Cost

2,404

5,216

2,889

4,710

249

226

1,304

854

286

18,138

Less: Accumulated DD&A

2,128

1,448

1,445

432

78

47

179

494

148

6,399

Net Book Value2

276

3,76813

1,444

4,278

171

179

1,125

360

138

11,739

 

 

 

 

 

 

 

 

 

 

 

Goodwill

–

–

–

325

–

52

–

–

–

377

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