In 2008, the world experienced unprecedented financial turmoil. How has Nexen positioned itself to weather this storm and what will you do as the new CFO to ensure Nexen has sufficient financial resources for the future?
Our financial position is very strong. Even after acquiring an additional 15% in Long Lake, we have over $3.5 billion in cash and available committed credit facilities and zero debt maturities for the next three and a half years. We built this liquidity during good times because when you actually need the cash during market downturns, it’s often too late. Many companies with otherwise solid business models are now suffering because they don’t have access to sufficient liquidity today.
Financial strength provides us with options. We can choose to continue to invest in organic projects that will generate value over the long term. We can also be opportunistic in acquiring valuable assets at attractive prices and we’ve consistently demonstrated our ability to do this. In the late nineties, we acquired interests in a number of deep-water blocks in the Gulf of Mexico, during a period of weak oil prices. We repeated this strategy in 1998 when we acquired a working interest in what has become our Usan discovery, offshore West Africa. And just recently, we acquired an additional interest in our Long Lake oil sands development for less than cost. We continue to look for similar opportunities in today’s environment but we are mindful of the importance of not deploying our liquidity too early. We continue to monitor the financial landscape very closely and will adjust our capital spending as necessary.
We remain optimistic on commodity prices over the long term and believe our strategies will continue to generate value. We develop assets with long cycle-times and have structured our financing to manage short-term market volatility. By building liquidity in good times and taking a disciplined, counter-cyclical investment approach during downturns, we will not only endure the current financial turmoil, but also come out with a stronger portfolio of assets. Our financial strength affords us choices in a challenging environment.
