1. Nexen Inc. Brian Reinsborough President Nexen Petroleum U.S.A., Inc. Friday, December 5, 2008 Challenges in the Deepwater Gulf of Mexico

2. Nexen Inc. Agenda  Why Deepwater Gulf of Mexico?  Challenges Our Industry Faces  The Path Forward

3. Nexen Inc. Why Deepwater GoM?  Long-Term Demand for Oil Remains Strong  Deepwater has Large Yet-to-Find Resources  Fiscal Regime is Stable and Attractive  Proximity to a Consuming Market  Deepwater Drilling will Account for 25% of Offshore Production  Technology Breakthroughs will Drive Activity

4. Nexen Inc. Challenges Our Industry Faces: External Environment External Environment Competitive Landscape Access Technology Infrastructure Development

5. Nexen Inc.  Players / New Entrants  Access  Costs Competitive Landscape InfrastructureDevelopment Competitive Landscape AccessTechnology

6. Nexen Inc. Access InfrastructureDevelopment Competitive Landscape AccessTechnology  Lease Sales  M&A

7. Nexen Inc. Technology InfrastructureDevelopment Competitive Landscape AccessTechnology  Seismic  New Plays  Complex Geology

8. Nexen Inc. Infrastructure Development Competitive Landscape AccessTechnology  Infrastructure Development  Tie-backs

9. Nexen Inc. Development InfrastructureDevelopment Competitive Landscape AccessTechnology  Resource Constraints  Execution  Knowledge

10. Nexen Inc. Response Credit Tightness Lower Oil Price Majors Exploit “opportunistic” M&A Maintain low debt levels (reduce buy- backs?) Seek to reduce costs Exploration review Type of Company Large Caps Delay /phase major projects Asset rationalisation for some Conserve cash Reduce discretionary expenditure E&P Sell assets to fund developments Struggle to raise finance Cut exploration activity Seek financially strong partners Lack of project finance Domestic budget pressures NOC – Resource Holder Service Companies Become more competitive seeking service contracts with NOCs Slow investment in new equipment Margins at risk as activity falls Impact of Lower Prices & Recession

11. Nexen Inc. The Path Forward  Longer-Term Oil Price Forecast Remains Strong  recession believed to be short term  worldwide supply/demand equation will balance  Projects may Slow Short Term  industry consolidation expected to occur  some companies will conserve capital  Deepwater Projects are Long-Term Focused  Deepwater Rigs will keep Drilling  assumes capital is available for contract owners  deepwater rigs still in short supply  Technology Advancements will Improve Economics of New Plays