Nexen Reports Third Quarter Results-2007 Production Growth on Track

Market Wire, October, 2006

                                 Three Months Ended   Nine Months Ended
                                       September 30        September 30
                                 ---------------------------------------
(Cdn$ millions)                       2006     2005       2006     2005
------------------------------------------------------------------------
Production (mboe/d)(1)
 Before Royalties(2,3)                 203      232        213      247
 After Royalties(2,3)                  148      164        155      176
Net Sales                              997    1,121      3,016    3,013
Cash Flow from Operations(4)           594      488      1,996    1,631
 Per Common Share ($/share)(4)        2.26     1.87       7.62     6.27
Net Income                             193      615        520      852
 Per Common Share ($/share)           0.74     2.36       1.98     3.28
Capital Expenditures                   879      648      2,430    1,923
------------------------------------------------------------------------

(1) Production includes our share of Syncrude oil sands. US investors
    should read the Cautionary Note to US Investors at the end of this
    release.
(2) Third quarter 2005 volumes include approximately 7 mboe/d before
    royalties and 5 mboe/d after royalties of production related to
    asset dispositions completed in the third quarter of 2005.
(3) Year to date 2005 volumes include approximately 14 mboe/d before
    royalties and 11 mboe/d after royalties of production related to
    asset dispositions completed in the third quarter of 2005.
(4) For reconciliation of this non-GAAP measure see Cash Flow from
    Operations on pg. 7.

Nexen delivered strong financial results with cash flow of $594 million and net income of $193 million in the third quarter of 2006. With oil comprising approximately 80% of our production, strong benchmark crude oil prices and narrow product quality differentials contributed to these results. In the third quarter of 2005, net income included significant gains from asset dispositions.

Earlier this year, a court of arbitration concluded that Nexen breached an obligation with respect to Block 51 in Yemen. While the amount of damages is yet to be determined, we have reduced our net income by $93 million to reflect our estimate of this liability.

Oil and Gas Production
                               Production before       Production after
                                       Royalties              Royalties
Crude Oil, NGLs and
Natural Gas (mboe/d)            Q3 2006   Q2 2006     Q3 2006   Q2 2006
-------------------------------------------------     ------------------
Yemen                                90        95          50        53
North Sea                            15        23          15        23
Canada                               37        38          30        31
United States                        34        35          29        30
Other Countries                       7         7           6         6
Syncrude                             20        17          18        15
                                -----------------     ------------------
Total                               203       215         148       158
                                -----------------     ------------------

Our third quarter production averaged 203,000 boe/d (148,000 boe/d after royalties). This was less than the second quarter due primarily to an extended maintenance turnaround at the Scott platform in the North Sea and natural declines elsewhere, offset by higher volumes at Syncrude.

Currently, we are producing approximately 212,000 boe/d. Production is expected to increase significantly in the fourth quarter with full volumes from Syncrude, the restoration of shut-in production in the Gulf of Mexico and new volumes from Aspen and Buzzard. At Syncrude, modifications to eliminate odours were completed and the expansion is now operating at capacity, increasing our share of production to approximately 25,000 bbls/d. In the Gulf of Mexico, we are restoring approximately 4,000 boe/d of production shut-in by last year's hurricanes. At Aspen, we are completing the development well drilled in the third quarter. This well is expected to come on stream before year-end. Based on results from this well, we see additional opportunities in the Aspen field and plan to sidetrack the Aspen 1 well to exploit deeper sands. In addition, we expect first production from Buzzard in late November. We expect our 2006 annual production before royalties to average approximately 220,000 boe/d (165,000 boe/d after royalties), depending upon the timing of these incremental volumes.

"This is an exciting time for Nexen," stated Charlie Fischer, Nexen's President and CEO. "With first oil from Buzzard expected before year-end and production at Long Lake next year, we are on the cusp of significant, high-margin production growth."

Buzzard on Track for First Oil

Our Buzzard project remains on schedule and on budget. Final hook-ups and commissioning are nearing completion. We expect production to ramp up as we tie-in the initial eight development wells, reaching peak rates of approximately 85,000 boe/d, net to us, in the first half of 2007. We have a 43.2% operated working interest in Buzzard.