Nexen Inc. reported fourth quarter and annual operating and financial results, and provided a progress update on its strategic priorities for 2012. In the fourth quarter, we generated cash flow from operations of $585 million ($1.11/share), reflecting a 12% increase in production over the third quarter to 208,000 boe/d (193,000 boe/d after royalties), and cash netbacks from oil and gas operations of $42.85/boe (after-tax). Net income was $43 million ($0.08/share), reflecting one-time, after-tax charges of $190 million ($0.36/share) related to previous costs associated with our shift away from large, integrated upgrading projects in our future oil sands development strategy, and $127 million after-tax ($0.24/share) for impairments related to our gas assets in Canada and the United States, due to low gas prices.
For the full year, cash flow was $2.4 billion ($4.49/share), net income was $697 million ($1.32/share) and production averaged 207,000 boe/d (186,000 boe/d after royalties). Cash netbacks from oil and gas operations were $40.20/boe (after-tax) in 2011. The annual results met our expectations for cash flow ($2.1-$2.8 billion) and our revised expectations for production (200,000-215,000 boe/d). Total 2011 capital expenditures of $2.6 billion were also within our expected range of $2.4-$2.7 billion.
"Nexen delivered solid results in the fourth quarter," said Kevin Reinhart, Nexen's interim President & CEO. "Production met expectations, Long Lake generated positive cash flow, and we entered into two joint ventures in the Gulf of Mexico and shale gas with strong partners.
"I'm pleased with the commitment our employees have made to delivering on our strategic priorities for 2012 and beyond," continued Reinhart. "2012 has started off strong. Long Lake production continues to grow and Buzzard is back to operating normally. We advanced our near term production growth projects including Usan, our UK tiebacks and Long Lake pads 12 and 13. We are also excited about our second drilling success on the Appomattox field in the Gulf of Mexico."