Nexen Provides Hurricane Ike Update

Market Wire, September, 2008

Following the initial assessment of damage to its assets in the Gulf of Mexico caused by Hurricane Ike, Nexen Inc. provides the following update.

Our Green Canyon 6, 50 and 137 deep-water fields are shut-in following the toppling of a third-party processing platform. We are currently evaluating alternative production options for these fields. On the shelf, at Vermilion 321/340, there is substantial damage to the lower decks of some of the platforms. We do not expect production there to be restored until 2009. Production from these particular deep-water and shelf fields was approximately 5,600 equivalent barrels of oil per day prior to the hurricane.

On the shelf, initial assessments indicate minor damage to a number of our other production facilities and subject to the completion of underwater assessments, we will make the necessary repairs and expect to restore production later this year. In the deep-water, Gunnison received minor damage while at Aspen and Wrigley, third-party host facilities were damaged. These deep-water fields are expected to recommence production this year but timing is uncertain because of reliance on third-party repairs. A number of our other properties have been brought back online while others are ready to start production when allowed.

For the rest of this quarter, we expect minimal production volumes from our Gulf of Mexico operations as we work to restore production activities. For the fourth quarter, we expect our production volumes in the Gulf to range between 10,000 and 20,000 boe/d. Production volumes are dependant on the timing of repair work and the readiness of third-party infrastructure, such as production platforms and pipelines.

"Prior to Hurricanes Gustav and Ike, we were producing approximately 30,000 equivalent barrels per day in the Gulf," said Charlie Fischer, Nexen's President and Chief Executive Officer. "With the significant production downtime caused by these hurricanes, we expect to be slightly below the low end of our production guidance this year."

Drilling operations at our Cote de Mer prospect were suspended on account of Hurricanes Gustav and Ike. Drilling operations have resumed.

Nexen carries insurance coverage for physical damage caused by hurricanes, subject to certain deductibles.

Nexen Inc. is an independent, Canadian-based global energy company, listed on the Toronto and New York stock exchanges under the symbol NXY. We are uniquely positioned for growth in the North Sea, Western Canada (including the Athabasca oil sands of Alberta and unconventional gas resource plays such as coalbed methane and shale gas), deep-water Gulf of Mexico, offshore West Africa and the Middle East. We add value for shareholders through successful full-cycle oil and gas exploration and development and leadership in ethics, integrity, governance and environmental protection.

Forward-Looking Statements

Certain statements in this report constitute "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) or "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements or information ("forward-looking statements") are generally identifiable by the terminology used such as "anticipate", "believe", "intend", "plan", "expect", "estimate", "budget", "outlook" or other similar words and include statements relating to or associated with individual wells, regions or projects. Any statements as to possible future crude oil, natural gas or chemicals prices, future production levels, future cost recovery oil revenues from our Yemen operations, future capital expenditures and their allocation to exploration and development activities, future earnings, future asset dispositions, future sources of funding for our capital program, future debt levels, possible commerciality, development plans or capacity expansions, future ability to execute dispositions of assets or businesses, future cash flows and their uses, future drilling of new wells, ultimate recoverability of reserves or resources, expected finding and development costs, expected operating performance, including expected reliability of operations and expected operating costs, future demand for chemicals products, estimates on a per share basis, sales, future expenditures and future allowances relating to environmental matters and dates by which certain areas will be developed or will come on stream, and changes in any of the foregoing are forward-looking statements. Statements relating to "reserves" or "resources" are forward-looking statements, as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated, and can be profitably produced in the future.

The forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for oil and gas and chemicals products; our ability to explore, develop, produce, upgrade and transport crude oil and natural gas to markets; the results of exploration and development drilling and related activities; the risks inherent in operating in harsh climates; the risks inherent in operating significant facilities which process hazardous and potentially explosive materials under high temperature and pressure; volatility in energy trading markets; foreign-currency exchange rates; economic conditions in the countries and regions in which we carry on business including the increasing costs of materials and labour and the ability of suppliers to meet delivery schedules and cost estimates; governmental actions including changes to taxes or royalties, changes in environmental and other laws and regulations; renegotiations of contracts; results of litigation, arbitration or regulatory proceedings; and political uncertainty, including actions by terrorists, insurgent or other groups, or other armed conflict, including conflict between states. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are interdependent, and management's future course of action would depend on our assessment of all information at that time.