Nexen Inc. Delivers Strong Fourth Quarter and Annual Financial Results in 2006

Market Wire, February, 2007

                                   Three Months Ended  Twelve Months Ended
                                          December 31          December 31
                                   ------------------- --------------------
(Cdn$ millions)                        2006      2005       2006      2005
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Production (mboe/d)(1)
 Before Royalties                       207       225        212       242
 After Royalties                        161       165        156       173
Net Sales                               920     1,073      3,936     4,086
Cash Flow from Operations(2)            673       772      2,669     2,403
 Per Common Share ($/share)(2)         2.56      2.96      10.18      9.23
Net Income                               77       303        601     1,140
 Per Common Share ($/share)            0.29      1.16       2.29      4.38
Capital Expenditures                    951       731      3,458     2,691
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(1) Production and reserves in this release also include our share of
    Syncrude oil sands. US investors should read the Cautionary Note to US
    Investors at the end of this release.
(2) For reconciliation of this non-GAAP measure, see Cash Flow from
    Operations on pg. 9.

Strong commodity prices, together with attractive cash operating margins and outstanding contributions from our marketing division, resulted in solid financial results for the fourth quarter and the year.

Fourth quarter cash flow was $673 million, while net income was $77 million. Our marketing division generated $147 million of cash flow in the quarter, primarily through an increase in the value of financial contracts protecting the value of physical storage which will be delivered in the future. Net income for the quarter was reduced by $61 million to adjust the carrying value of certain oil and gas properties located primarily on the shelf of the Gulf of Mexico, $49 million of stock-based compensation expense and $80 million of exploration expense. This includes three unsuccessful wells in the Gulf of Mexico, three wells in Yemen, and one well in Colombia.

Cash flow for the year grew 11% to a record $2.7 billion, while net income was $601 million. Oil prices reached new highs resulting in a 9% increase in our realized commodity price over 2005. In addition, our marketing division had a record year as they were able to leverage their physical inventory and transportation assets, and capitalize on market volatility, primarily in summer/winter natural gas price spreads. These positive contributions were offset by charges which reflected the settlement of the Yemen Block 51 arbitration ($104 million after tax), an increase in the UK tax rate ($277 million) and the reduction in the carrying value of oil and gas assets ($61 million after tax).

"Overall, I am very pleased with our performance in 2006," said Charlie Fischer, Nexen's President and Chief Executive Officer. "We have completed Buzzard and the Syncrude Stage 3 expansion, and made solid progress at our Long Lake project which will start up later this year. Our accomplishments position us for an exciting 2007 as we ramp up production at Buzzard, bring Long Lake on stream, evaluate our recent discoveries and continue our exploration program."

Oil and Gas Production

                Production before Royalties   Production after Royalties
Crude Oil, NGLs          Fourth       Third         Fourth         Third
and Natural Gas         Quarter     Quarter        Quarter       Quarter
 (mboe/d)                  2006        2006           2006          2006
--------------------------------------------- -----------------------------
Yemen                        84          90             52            50
United Kingdom               24          15             24            15
Canada                       38          37             31            30
United States                33          34             28            29
Other Countries               6           7              6             6
Syncrude                     22          20             20            18
                  --------------------------- -----------------------------
Total                       207         203            161           148
                  --------------------------- -----------------------------

                Production before Royalties   Production after Royalties
Crude Oil, NGLs
 and Natural Gas         Annual      Annual         Annual        Annual
 (mboe/d)                  2006        2005           2006          2005
--------------------------------------------- -----------------------------
Yemen                        93         113             52            61
United Kingdom               20          16             20            16
Canada                       38          50(1)          31            40(1)
United States                36          42             31            36
Other Countries               6           5              6             5
Syncrude                     19          16             16            15
                  --------------------------- -----------------------------
Total                       212         242            156           173
                  --------------------------- -----------------------------

(1) Annual volumes include approximately 10,700 boe/d before royalties and
    8,100 boe/d after royalties of production related to asset dispositions
    in 2005.