2010 Performance Summary

Metrics Matter:

Nexen is committed to transparent disclosure and continuous improvement. That’s why we track our health and safety, environmental, social and economic performance through metrics that show us how well we’re doing and what actions we need to take to continuously improve.

The following table provides a snapshot of our performance.

	2008	2009	2010
Employee total recordable injury frequency	0.26	0.37	0.37
Contractor total recordable injury frequency	1.27	1.04	0.80
Production before royalties (mboe/d)	250	243	246
Company-wide production carbon intensity (tonnes of CO2 equivalent/m3 of oil equivalent)	0.16	0.20	0.28
Company-wide CO2 equivalent (million tonnes)	3.8	4.7	6.3
Number of reportable environmental spills	114	127	83
Community investment (Cdn$ millions)	12.7	11.4	11.4

2010 Highlights

• We reduced the total recordable injury frequency rate (TRIF) by 19%. 
• Our Canadian Oil & Gas division was publicly verified for meeting the ethic, policies and codes of practice of Responsible Care®.
• We decreased the crude oil, chemical and produced water spills that occurred at our business by 35%. More importantly, the volume of liquid we spilled also decreased dramatically – dropping by 72% over 2009.
• We launched “ReachOut” – a community investment initiative aimed at strengthening our corporate giving and matching grants to non-profit and charitable organizations. ReachOut also encourages active participation in our communities through volunteering.
• Nexen was named one of the Global 100 Most Sustainable Corporations by Corporate Knights magazine.
• Reclamation efforts included the planting of 32,000 seedlings at Long Lake; an additional 75,000 are being planted in 2011 to restore areas disturbed by seismic and core hole exploration.
• Nexen’s “How We Work: Our Integrity Guide” received a ranking of “A” and placed among the top 1% when benchmarked against 1,400 other corporate codes of conduct by a third-party expert.
• A moratorium that was placed on offshore drilling in the Gulf of Mexico in 2010 presented Nexen with an opportunity; we used the hiatus to review our offshore operations and put in place improvements to strengthen our safety and environmental performance.

2010 Disappointments

• A contractor was fatally injured while working at our drilling operations in Yemen. To strengthen our safety performance, we launched a Life Saving Rules program in 2011.
• Long Lake averaged 16,000 barrels of bitumen per day (before royalties) in 2010 compared to an average of 9,000 barrels of bitumen per day (before royalties) in 2009. While the ramp up was encouraging, this nearly doubling of our production coincided with increased greenhouse gas emissions. We plan to drill more wells in higher quality areas of our lease to boost production and reduce GHG intensity.
• The number of environmental exceedances increased over previous years, mostly due to nitrous oxides (NO_X) exceedances at the Long Lake facility resulting from plant upsets. In the first half of 2011, we’ve reduced exceedances by over 50% by improving process reliability.

2011 Priorities

We’re committed to improving our health, safety, environmental and social performance. The following are selected focus areas for 2011.

Health & Safety:

• Implement the “Life Saving Rules” for safety. Created from industry best practice, our Life Saving Rules will lay the foundation for us to achieve zero serious incidents.

Environment:

• Advance work to capture and verify waste and water data across the organization.
• At our shale gas operations in British Columbia, continue the water assessment and monitoring program and advance research into new technology that may reduce the use of fresh water.

Social Responsibility:

• Update our human rights policy to reflect recent United Nations and multi-stakeholder developments in this field.
• Complete a stakeholder relations good practice guide.

Economic:

• Nexen plans to invest approximately $425 million on in-situ capital projects in 2011 that are primarily aimed at improving the reliability of the Long Lake facility. These investments are also expected to improve environmental performance as well as producing economic benefits for our stakeholders.