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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NO. 001-06702
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
NEXEN SAVINGS PLAN
5601 Granite Parkway Suite 1400
Plano, Texas 75024-6654
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
NEXEN INC.
801 - 7th Avenue SW
Calgary, Alberta, Canada T2P 3P7
NEXEN SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2009 AND 2008
C O N T E N T S
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......................1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits.........................2
Statements of Changes in Net Assets Available for Benefits..............3
Notes to Financial Statements...........................................4
SUPPLEMENTAL SCHEDULE *
Schedule H, line 4i - Schedule of Assets (Held at End of Year).........19
* Other schedules required by 29 CFR 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under Employee
Retirement Income Security Act of 1974 have been omitted because they are
not applicable.
[LETTERHEAD OF WEAVER AND TIDWELL, L.L.P.]
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Administrative Committee
NEXEN SAVINGS PLAN
Plano, Texas
We have audited the accompanying statements of net assets available for
benefits of the (the Plan) as of December 31, 2009 and 2008, and the related
statements of changes in net assets available for benefits for the years then
ended. These financial statements and the supplemental schedule referred to
below are the responsibility of the Plan's Administrative Committee. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Nexen
Savings Plan as of December 31, 2009 and 2008, and the changes in its net
assets available for benefits for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
(held at end of year) is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Weaver and Tidwell, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
June 23, 2010
NEXEN SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2009 AND 2008
2009 2008
-------------- --------------
ASSETS
Cash $ 183,602 $ 197,139
Investments, at fair value 74,560,448 37,692,731
Investment trades receivable 124,819 -
Accrued dividends receivable - 26,221
Participant loans 804,239 808,274
-------------- --------------
TOTAL ASSETS 75,673,108 38,724,365
-------------- --------------
LIABILITIES
Due to broker 183,942 172,448
Other payables - 5
-------------- --------------
TOTAL LIABILITIES 183,942 172,453
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE 75,489,166 38,551,912
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts (68,943) 219,680
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 75,420,223 $ 38,771,592
============== ==============
The Notes to Financial Statements are
an integral part of these statements.
2
NEXEN SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
----------------------------------
ADDITIONS
Investment income:
Net appreciation (depreciation)
in fair value of investments $ 11,012,611 $ (20,741,133)
Interest 54,760 75,112
Dividends 616,717 1,454,258
---------------- ---------------
11,684,088 (19,211,763)
---------------- ---------------
Contributions:
Participants 3,280,741 2,883,061
Employer 2,196,049 1,862,516
Rollover 315 109,074
---------------- ---------------
5,477,105 4,854,651
---------------- ---------------
Other income 7,747 -
Transfer into plan 22,313,374 64,116
---------------- ---------------
NET ADDITIONS 39,482,314 (14,292,996)
---------------- ---------------
DEDUCTIONS
Benefits paid to participants 2,828,467 5,724,076
Administrative expenses 5,216 4,656
---------------- ---------------
TOTAL DEDUCTIONS 2,833,683 5,728,732
---------------- ---------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE 36,648,631 (20,021,728)
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 38,771,592 58,793,320
---------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ 75,420,223 $ 38,771,592
================ ===============
The Notes to Financial Statements are
an integral part of these statements.
3
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF THE PLAN
The following description of the (the Plan) is provided for general
information purposes only. More complete information regarding the Plan's
provisions may be found in the Plan Document.
GENERAL
The Plan is a defined contribution plan that was adopted September 1,
1988, and amended and restated effective January 1, 2002, to provide
eligible employees of Nexen Petroleum U.S.A. Inc. (the Company) and
Nexen Marketing U.S.A. Inc. (the Participating Employers), wholly
owned subsidiaries of Nexen Inc., a method to meet their long-range
financial objectives under the requirements of Section 401(k) of the
Internal Revenue Code.
Charles Schwab Trust Company (the Trustee) is the Plan trustee, and
the recordkeeping function is performed by Schwab Retirement Services
Company, formerly known as "The 401(k) Company" (the Recordkeeper).
On December 31, 2009, the Company merged the Nexen Pension Plan into
the Nexen Savings Plan. All investments were reregistered to the Nexen
Savings Plan from the Nexen Pension Plan, and a transfer into the
Nexen Savings Plan in the amount of $22,313,374 was recognized and
reflected on the statement of changes in net assets available for
benefits. Effective January 1, 2010, the Nexen Savings Plan was
renamed as the Nexen 401(k) Savings and Pension Plan.
ELIGIBILITY
All regular employees of the Company and Participating Employers who
are 18 years of age and over are eligible to participate in the Plan
on the entry date coinciding with or following the date the employee
attains age 18.
CONTRIBUTIONS
Participant contributions are made on a voluntary basis and directly
withheld from the participant's eligible compensation, as defined in
the Plan Document. The Plan offers participants the option of making
Salary Deferral Contributions and/or Roth 401(k) Contributions.
Contributions may be made with: pretax dollars; after-tax dollars; or
a combination of pretax and after-tax dollars. Eligible compensation
excludes overtime and bonuses. Participants are immediately vested in
their employee contribution account and actual earnings thereon.
4
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF THE PLAN - CONTINUED
CONTRIBUTIONS - CONTIUED
The Company and Participating Employers will match 100% of Participant
contributions up to 6% of the Participant's eligible compensation.
Participants are immediately 100% vested in their employer matching
account.
The Company and Participating Employers will begin making a pension
contribution to the Plan effective January 1, 2010. The contribution
is equivalent to the former pension plan contribution in the Nexen
Pension Plan which is 6% of an eligible participant's compensation up
to the social security wage base and 11.5% thereafter until the
compensation limit is reached.
VESTING
Vesting in the Plan is based on the following schedule:
Vested Percentage
--------------------------------------------
Years of Credited 401(k) Matching Employer Pension
Service Account Account
-------------------- --------------------------------------------
Less than 2 100% 0%
2 or more 100% 100%
FORFEITURES
At December 31, 2009, forfeited amounts totaling $69,457 related to
the Nexen Pension Plan were transferred into the Nexen Savings Plan.
Forfeitures from the Nexen Pension Plan which were transferred into
the Nexen Savings Plan related to non-vested interest in terminated
employees pension accounts which are to be used to: (a) restore any
prior forfeited amounts in an employee's account whom was previously
terminated, rehired, and meets the requirements to receive their
original nonvested portion which had been forfeited, (b) used to pay
any reasonable and necessary expenses incurred in connection with the
administration of the Plan as the Plan's Administrative Committee
directs, or (c) applied to reduce the amount of matching contributions
and employee pension contributions the employer would otherwise make
under the terms of the Plan. As of December 31, 2009 and 2008
unallocated forfeitures totaled $69,457 and $72,264, respectively.
5
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF THE PLAN - CONTINUED
INVESTMENTS
The Plan's investment options are: (1) Charles Schwab Stable Value
Fund, Select Unit Class (2) Vanguard Total Bond Market Index Signal,
(3) American Century Real Estate Investment Fund, (4) Royce Value
Service Fund, (5) DWS Equity 500 Index S Fund, (6) American Funds
Growth Fund of America A, (7) First Eagle Overseas Fund A, (8)
American Funds EuroPacific Gr A, (9) American Funds Washington Mutual
A, (10) Oppenheimer Developing Markets Fund A, (11) Third Avenue Value
Insti Cl, (12) American Beacon Small Cp Val Inv, (13) Federated
Capital Reserves, and (14) Nexen Inc. Stock Fund. All Company and
Participating Employers' contributions are invested in accordance with
the investment choices selected by each respective Participant.
PAYMENTS OF BENEFITS
Distribution of a Participant's entire account becomes due in three
ways: (1) upon termination of employment, (2) death, or (3)
disability, as defined in the Plan Document. At the option of the
Participant or beneficiary, such account balances may be distributed
in a lump-sum payment or via periodic installment payments as
described in the Plan Document.
Withdrawals from the Plan by active Participants are permitted for
specific instances of financial hardship and age 59 1/2 withdrawals,
which can be made once every six months. Once per Plan year, a
Participant may withdraw a portion or all of his or her after-tax and
rollover account, subject to a $250 minimum.
BASIS OF ACCOUNTING
The financial statements of the Plan are presented on the accrual
basis of accounting in accordance with accounting principles generally
accepted in the United States of America. Current year contributions,
expenses, and investment income, including both interest and
dividends, which are not received or paid until the subsequent year,
are accrued in the current year. Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions to and deductions
from net assets available for benefits during the reporting period.
Actual results could differ from those estimates.
6
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments are stated at fair value based on quoted market prices at
the Plan's year end. Purchases and sales of investments are recorded
on a trade date basis. Participants may direct their contributions and
any related earnings into many distinct investment options, including
the Nexen Inc. Stock Fund. Interest is allocated to Participant
accounts on a pro-rata basis depending on the Participants' account
balance. Dividends are allocated based on the number of shares in a
Participant's account.
NATURE OF INVESTMENT CONTRACTS
The Plan's Charles Schwab Stable Value Class S Fund (the Fund) invests
primarily in wrap contracts (also known as synthetic GICs). In a wrap
contract, the underlying investments are owned by the Fund and held in
trust for plan participants. The Fund purchases wrap contracts from
high-quality insurance companies or banks that serve to substantially
offset the price fluctuations in the underlying investments caused by
movements in interest rates. Each wrap contract obligates the
principal amounts invested in the underlying investments, plus
interest accrued at a crediting rate established under the contract,
less any adjustments for withdrawals (as specified in the wrap
agreement). Under the terms of the wrap contract, the realized and
unrealized gains and losses on the underlying investments are, in
effect, amortized over the duration of the underlying investments,
through adjustments to the future contract interest crediting rate
(which is the rate earned by participants in the Fund for the
underlying investments). The wrap contract provides that the
adjustments to the interest crediting will not result in a future
interest crediting rate that is less than zero. This ensures that
participants' principal and accrued interest will be protected.
In general, if the contract value of the wrap agreement exceeds the
market value of the underlying investments (including accrued
interest), the wrap issuer becomes obligated to pay that difference to
the Fund in the event that shareholder redemptions result in a total
liquidation. In the event that there are partial shareholder
redemptions that would otherwise cause the contract's crediting rate
to fall below zero percent, the wrap issuer is obligated to contribute
to the Fund an amount necessary to maintain the contract's crediting
rate at least zero percent. The circumstance under which payments are
made and the timing of payments between the Fund and the wrap issuer
may vary based on the terms of the wrap contract.
7
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
NATURE OF INVESTMENT CONTRACTS - CONTINUED
In certain circumstances, the amount withdrawn from the wrap contract
would be payable at fair value rather than at contract value. These
events include termination of the Plan, a material adverse change to
the provisions of the Plan, the employer elects to withdraw from a
wrap contract in order to switch to a different investment provider,
or if the terms of a successor plan (in the event of the spin-off or
sale of a division) do not meet the wrap contract issuer's
underwriting criteria for issuance of a clone wrap contract.
While it is possible that some of the plans participating in the Fund
may experience plan terminations or other events that would trigger
fair value payouts under the Fund's wrap agreements, based on prior
experience, management of the Fund believes it is not probable that
such events would be of sufficient magnitude to limit the ability of
the Fund to transact at contract value with the participants in the
Fund. Given that such events are beyond the control of the Plan,
however, there can be no guarantee that this will be the case.
Average yields for Charles Schwab Stable Value Fund
Year ended
December 31,
---------------
2009 2008
------ ------
Based on actual earnings (at fair value) 2.65% 5.25%
Based on interest rate credited to
participants (at fair value) 3.06% 3.72%
The Plan follows current guidance on investment contracts held by a
defined-contribution plan which requires these types of investments to
be reported at fair value. However, contract value is the relevant
measurement attribute for that portion of the net assets available for
benefits of a defined contribution plan attributable to fully
benefit-responsive investment contracts because contract value is the
amount participants would receive if they were to initiate permitted
transactions under the terms of the plan. As required, the Statements
of Net Assets Available for Benefits present the fair value of the
investment contracts as well as the adjustment of the fully
benefit-responsive investment contracts from fair value to contract
value. The Statements of Changes in Net Assets Available for Benefits
are prepared on a contract value basis.
8
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
MARKET AND CREDIT RISKS
The Plan invests in a variety of investments. Investments are exposed
to various risks, such as interest rate, market and credit risks. Due
to the level of risk associated with certain investments, it is at
least reasonably possible that the changes in the values of the
investments will occur in the near term and that such changes could
materially affect the amount reported in the Plan's statement of net
assets available for benefits.
ADMINISTRATION
The Plan is administered by the Administrative Committee, which is
composed of members who are either officers or employees of the
Company. Investment options for the Plan are selected by the Benefit
Plan Design Committee from funds available through the Recordkeeper.
Some of the fund providers charge 12b-1 fees at the fund level before
earnings are paid to investors.
The Recordkeeper receives fees from these fund providers from 12b-1
fees charged to the funds. 12b-1 fees received by the Recordkeeper are
based on Plan assets invested in each fund. Similarly, all Trustee
fees for the Plan are received from 12b-1 fees charged to the funds.
12b-1 fees received by the Trustee are also based on Plan assets
invested in each fund.
LOANS TO PARTICIPANTS
Participant loans receivable are stated at cost, which approximates
fair value. A Participant may borrow up to the lesser of 50% of his or
her vested account balance or $50,000 with a minimum loan amount of
$1,000. The vested account balance for loans does not include pension
sources. Loans are repayable through payroll deductions over periods
ranging up to 60 months. Participants are charged a $50 loan set-up
fee with a $2 monthly maintenance fee per loan. The loans are secured
by a lien on the borrower's vested account balance in the Plan and
bear interest at rates based on prevailing market conditions. Interest
rates on outstanding loans ranged from 4.43% to 9.13% at December 31,
2009.
9
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has
the right to terminate the Plan pursuant to provisions set forth by
the Plan Document and subject to the provisions of ERISA. In the event
of Plan termination, each Participant's account shall become fully
vested and Participants will be entitled to distributions of their
entire accounts.
NEW ACCOUNTING PRONOUNCEMENTS
In April 2009, the FASB issued guidance under ASC 820 for determining
fair value when the volume and level of activity for the asset or
liability have significantly decreased and identifying transactions
that are not orderly. This standard incorporates a two-step process to
determine whether a market is not active and a transaction is not
distressed. The Plan adopted guidance under this standard for the Plan
year ended December 31, 2009. The effects of adopting this standard
did not have a material impact on the Plan's financial statements.
In June 2009, the FASB issued guidance which requires companies to
recognize in the financial statements the effects of subsequent events
that provide additional evidence about conditions that existed at the
date of the Statement of Net Assets Available for Benefits, including
the estimates inherent in the process of preparing financial
statements. Companies are not permitted to recognize subsequent events
that provide evidence about conditions that did not exist at the date
of the Statement of Net Assets Available for Benefits but arose after
the Statement of Net Assets Available for Benefits date and before
financial statements are issued. Some non-recognized subsequent events
must be disclosed to keep the financial statements from being
misleading. For such events a company must disclose the nature of the
event, an estimate of its financial effect, or a statement that such
an estimate cannot be made. This guidance applies prospectively for
interim or annual financial periods ending after June 15, 2009. The
adoption of this guidance did not affect the financial condition or
income and changes in Plan net assets. The Plan has evaluated its
subsequent events through June 23, 2010, the date the financial
statements are available to be issued.
10
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED
In June 2009, the FASB issued guidance which established the "FASB
Accounting Standards Codification" (Codification) as the single source
of authoritative nongovernmental U.S. GAAP which was launched on July
1, 2009. The Codification does not change current U.S. GAAP, but is
intended to simplify user access to all authoritative U.S. GAAP by
providing all the authoritative literature related to a particular
topic in one place. All existing accounting standard documents will be
superseded and all other accounting literature not included in the
Codification will be considered non-authoritative. Rules and
interpretive releases of the Securities and Exchange Commission (SEC)
under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. The Codification is effective
for interim and annual periods ending after September 15, 2009 and did
not have an impact on the Plan's financial statements.
NOTE 3. INVESTMENT PROGRAMS
As of December 31, 2009, the investment alternatives include the
following:
NEXEN INC. STOCK FUND - provides ownership interest in Nexen Inc.
common stock. Quarterly blackout periods apply to this fund and during
such blackout periods, participants are unable to purchase or sell
shares of Nexen Inc. common stock.
CHARLES SCHWAB STABLE VALUE FUND, SELECT UNIT CLASS - The Charles
Schwab Stable Value Fund is a collective investment trust fund that
allows participants to invest in stable value assets. The fund seeks
to provide investors with a stable rate of return while preserving
principal and maintaining liquidity.
AMERICAN BEACON SMALL CP VAL INV - is a small value fund that seeks
long-term capital appreciation and current income by investing over
80% of its assets in equity securities of companies within the United
States.
VANGUARD TOTAL BOND MARKET INDEX SIGNAL - is a fund that seeks to
track the performance of a broad, market-weighted bond index.
AMERICAN CENTURY REAL ESTATE INVESTMENT FUND - seeks long-term capital
appreciation; current income is a secondary consideration. The fund
invests at least 80% of assets in equities issued by companies in the
real estate industry.
ROYCE VALUE SERVICE FUND - is a small growth fund that seeks long-term
capital appreciation by investing at least 80% of assets in equity
securities.
11
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 3. INVESTMENT PROGRAMS - CONTINUED
DWS EQUITY 500 INDEX S FUND - is a large company growth and income
fund that invests primarily in equity securities of companies included
in the S&P 500.
AMERICAN FUNDS GROWTH FUND OF AMERICA A - is a large growth fund that
seeks capital growth by investing primarily in common stocks. The fund
may invest up to 15% of assets in securities of issuers domiciled
outside of the United States and Canada.
FIRST EAGLE OVERSEAS FUND A - is a foreign stock fund that seeks
long-term capital growth by investing primarily in equities of small
and mid-sized foreign companies in developed and emerging markets.
AMERICAN FUNDS EUROPACIFIC GR A - is a large company foreign stock
fund that seeks long-term capital appreciation by investing in
companies domiciled in developed countries outside the United States.
AMERICAN FUNDS WASHINGTON MUTUAL A - is a large company value-oriented
growth and income fund.
OPPENHEIMER DEVELOPING MARKETS FUND A - is an emerging markets stock
fund that seeks long-term growth by investing in stock of issues in
countries with developing markets.
THIRD AVENUE VALUE INSTI CL - is a small value fund that seeks
long-term capital appreciation by investing in equity securities
issued by companies that are believed to be undervalued and to have
strong financial positions and responsible management.
FEDERATED CAPITAL RESERVES - Seeks to provide investors with current
income consistent with stability of principle and liquidity. The fund
pursues its objective by investing primarily in a portfolio of
short-term, high-quality, fixed-income securities issued by banks,
corporations, and the U.S. government.
12
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 4. TAX STATUS
The Plan received a favorable determination letter from the Internal
Revenue Service dated April 5, 2002, stating that the Plan and its
amendments are qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the Code), and the trust is exempt from taxation
under Section 501(a) of the Code. The trust established under the Plan to
hold the Plan's assets is intended to qualify pursuant to the appropriate
section of the Internal Revenue Code as a tax-exempt organization. The
Plan has been amended since receiving the determination letter. However,
the Company and the Plan's tax counsel believe that the trust continues to
qualify and operate as designed.
NOTE 5. INVESTMENTS
Investments that represent 5% or more of the net assets available for Plan
benefits at December 31, 2009 and 2008 are as follows:
December 31, December 31,
2009 2008
Fair Value Fair Value
-------------- --------------
Bond Fund of America A $ $ 2,886,524
EuroPacific Growth Fund A 6,476,852 2,633,576
Nexen Inc. Stock Fund 16,405,315 11,126,459
Schwab Stable Value Class S 9,995,303 4,528,717
Vanguard Total Bond Market 5,669,546
Washington Mutual Investors Fund A 7,297,581 3,598,463
Oppenheimer Developing Markets Fund A 4,843,033
Growth Fund of America A 5,857,423 2,410,347
DWS Equity 500 Index S 4,831,307 2,012,263
During 2009 and 2008, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year) increased
(decreased) in value by $11,684,088 and $(19,211,763), respectively, as
follows:
2009 2008
------------------------------- -------------------------------
Realized and Realized and
Interest and Unrealized Interest and Unrealized
Dividends Gains (losses) Dividends Gains (losses)
-------------- --------------- -------------- ---------------
Mutual funds $ 534,367 $ 6,583,643 $1,390,669 $(13,024,048)
Stock funds 82,350 4,428,968 76,163 (7,717,085)
Loans to Participants 54,760 62,538
13
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 6. PLAN AMENDMENTS
On November 19, 2008, the Twelfth Amendment to the Nexen Savings Plan was
executed and adopted. The purpose of the amendment was to exclude from
participation in the Plan employees whose base salary is paid on the
payroll of a foreign Affiliate, regardless of whether a portion of the
Employee's compensation or wages is also paid or provided by an Employer.
On December 18, 2008, the Thirteenth Amendment to the Nexen Savings Plan
was executed and adopted. The purpose of the amendment was to 1) update
the employer's address to the location at 5601 Granite Parkway, Suite
1400, in Plano, Texas 75024, and 2) to bring the Plan into compliance with
the gap period income provisions of the Pension Protection Act of 2006 and
Code section 415 final regulations adopted by the Internal Revenue Service
on April 5, 2007.
On November 30, 2009, the Fourteenth Amendment to the Nexen Savings Plan
was executed and adopted. The purpose of this amendment was to restate the
Income Allocable to Excess Deferrals section of the Plan Document. For
plan years beginning on or after January 1, 2008, the income allocable to
excess deferrals is equal to the sum of the allocable gain or loss for the
taxable year of the individual and does not include gap period income.
NOTE 7. FAIR VALUE MEASUREMENT
In accordance with current guidance on fair value measurements and
disclosures, the Plan defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
When determining the fair value measurements for assets and liabilities
which are required to be recorded at fair value, the Plan considers the
principal or most advantageous market in which the Plan would transact and
the market-based risk measurements or assumptions that market participants
would use in pricing the asset or liability, such as inherent risk,
transfer restrictions and credit risk.
The Plan applies the following fair value hierarchy, which prioritizes the
inputs used to measure fair value into three levels, and bases the
categorization within the hierarchy upon the lowest level of input that is
available and significant to the fair value measurement:
LEVEL 1 -- Quoted prices in active markets for identical assets or
liabilities.
LEVEL 2 -- Observable inputs other than Level 1 prices such as quoted
prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term
of the assets or liabilities.
14
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 7. FAIR VALUE MEASUREMENT - CONTINUED
LEVEL 3 -- Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the
assets or liabilities.
The following is a description of the valuation methodologies used for
instruments measured at fair value, including the general classification
of such instruments pursuant to the valuation hierarchy.
MUTUAL FUNDS
These investments are public investment vehicles valued using the Net
Asset Value (NAV) provided by the administrator of the fund. The NAV
is based on the value of the underlying assets owned by the fund,
minus its liabilities, and then divided by the number of shares
outstanding. The NAV is a quoted price in an active market and
classified within level 1 of the valuation hierarchy.
COLLECTIVE INVESTMENT TRUST (STABLE VALUE FUND)
These investments are public investment vehicles valued using the NAV
provided by the administrator of the fund. The NAV is based on the
value of the underlying assets owned by the fund, minus its
liabilities, and then divided by the number of shares outstanding. The
NAV is classified within level 2 of the valuation hierarchy because
the NAV's unit price is quoted on a private market that is not active;
however, the unit price is based on underlying investments which are
traded on an active market.
NEXEN INC. COMMON STOCK
Nexen Inc common stock is valued at the closing price reported on the
New York Stock Exchange Composite Listing and is classified within
Level 1 of the valuation hierarchy.
LOANS TO PARTICIPANTS
Loans to Plan participants are valued at cost plus accrued interest,
which approximates fair value and are classified within Level 3 of the
valuation hierarchy.
15
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 7. FAIR VALUE MEASUREMENT - CONTINUED
Below are the Plan's financial instruments carried at fair value on a
recurring basis by the fair value hierarchy levels described above:
As of December 31, 2009
---------------------------------------------------------------
Quoted Prices
in Active Significant Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs Total
(Level 1) (Level 2) (Level 3) Fair Value
----------------- -------------- ------------- ----------------
Assets:
Common stock - Nexen $ 16,405,315 $ - $ - $ 16,405,315
Mutual funds
Bond 5,669,546 - - 5,669,546
Domestic equity 25,160,337 - - 25,160,337
Real estate 3,129,953 - - 3,129,953
International/global 14,199,994 - - 14,199,994
Collective investment trusts - 9,995,303 - 9,995,303
(Stable value fund)
Participant loans - - 804,239 804,239
----------------- -------------- ------------- ----------------
Total assets $ 64,565,145 $ 9,995,303 $ 804,239 $ 75,364,687
================= ============== ============= ================
As of December 31, 2008
---------------------------------------------------------------
Quoted Prices
in Active Significant Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs Total
(Level 1) (Level 2) (Level 3) Fair Value
----------------- -------------- ------------- ----------------
Assets:
Common stock - Nexen $ 11,126,459 $ - $ - $ 11,126,459
Mutual funds
Bond 2,886,524 - - 2,886,524
Domestic equity 11,430,624 - - 11,430,624
Real estate 1,385,697 - - 1,385,697
International/global 5,766,032 - - 5,766,032
Collective investment trusts - 4,528,717 - 4,528,717
(Stable value fund)
Money market fund - 568,678 - 568,678
Participant loans - - 808,274 808,274
---------------- -------------- ------------- ----------------
Total assets $ 32,595,336 $ 5,097,395 $ 808,274 $ 38,501,005
================ ============== ============= ================
16
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 7. FAIR VALUE MEASUREMENT - CONTINUED
The table below sets forth a summary of changes in the fair value of the
Plan's Level 3 investment assets and liabilities for the years ended
December 31, 2009 and 2008:
Balance, January 1, 2008 $ 761,928
Issuances, Payments, Maturities 46,346
------------------
Balance, December 31, 2008 808,274
Issuances, Payments, Maturities (4,035)
------------------
Balance, December 31, 2009 $ 804,239
==================
NOTE 8. DOL INQUIRY
In 2008 the Department of Labor (DOL) conducted an audit of the Plan. In a
letter dated May 9, 2009, the Department of Labor noted several possible
violations and requested further information and comment. The Company
responded to the DOL in a letter dated June 4, 2009 with additional
information and explanation of why it believes no violations occurred. On
March 4, 2010, the Department of Labor replied to the Company's letter and
noted all possible violations noted during the audit would be rescinded
and no violation occurred based on the responses provided to the original
findings.
17
NEXEN SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 9. RECONCILIATION OF FINANCIAL STATEMENTS TO SCHEDULE H OF FORM 5500
The following is a reconciliation of net assets available for benefits and
changes in net assets available for benefits per the financial statements
to Schedule H of Form 5500 as of and for the years ending:
2009 2008
-------------- ---------------
Net assets available for benefits per financial statements $ 75,420,223 $ 38,771,592
Adjustment from contract value to fair value not reported
on Schedule H of Form 5500 68,943 (219,680)
-------------- ---------------
Net assets available for benefits per Schedule H of
Form 5500 $ 75,489,166 $ 38,551,912
============== ===============
Increase (Decrease) in net assets available for benefits
per financial statements $ 36,648,631 $ (20,021,728)
Adjustment from contract value to fair value reported
on Schedule H of Form 5500 288,623 (180,086)
Transfers of assets into the Plan included in increase
in net assets available for benefits per financial statements
but not included in net income per Schedule H of Form 5500 (22,313,374) (64,116)
-------------- ---------------
Net gain (loss) per Schedule H of Form 5500 $ 14,623,880 $ (20,265,930)
============== ===============
Investments in the common collective trust are recorded on the Form 5500
at fair value but are adjusted to contract value for financial statement
presentation.
18
SUPPLEMENTAL SCHEDULE
NEXEN SAVINGS PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 06-0944810
PLAN NUMBER 001
DECEMBER 31, 2009
(a) (b) (c) (d) (e)
Description of Investment including
Identity of Issuer, borrower maturity date, rate of investment, Current
lessor, or similar party collateral, par, or maturity value Cost # value
- ---- -------------------------------------- --------------------------------------------- ------- -------------
PARTICIPANT-DIRECTED INVESTMENTS:
The Vanguard Group Vanguard Total Bond Market
Net Asset Value $10.35 $ 5,669,546
The American Funds Group Washington Mutual Investors Fund A,
Net Asset Value $24.64 7,297,581
The American Funds Group EuroPacific Growth Fund A,
Net Asset Value $38.34 6,476,852
American Beacon American Beacon Small Cap Value Plan
Net Asset Value $15.50 2,493,370
DWS Investments DWS Equity 500 Index Fund,
Net Asset Value $125.14 4,831,307
First Eagle Funds First Eagle Overseas Fund A,
Net Asset Value $19.46 2,880,109
Royce Funds Royce Value Service Fund,
Net Asset Value $10.13 2,668,650
The American Funds Group Growth Fund of America A,
Net Asset Value $27.33 5,857,423
Third Avenue Funds Third Avenue Value Fund,
Net Asset Value $46.32 2,012,006
American Century Investments American Century Real Estate Investment Fund,
Net Asset Value $14.43 3,129,953
Oppenheimer Funds Oppenheimer Developing Markets Fund A,
Net Asset Value $28.76 4,843,033
Schwab Funds Schwab Stable Value Class S,
Net Asset Value $18.82 9,995,303
Bank of America Cash 183,602
* Nexen Inc. Nexen Inc. Stock Fund,
(Nexen Inc. Stock, no par,
Net Asset Value $23.93) 16,405,315
* Loans to Participants Interest Rates From 4.43% to 9.13% 804,239
-------------
$ 75,548,289
=============
* Indicates each identified person/entity known to be party-in-interest.
# Historical cost information omitted as it is not required for
participant-directed investments.
This supplemental schedule lists assets held for investment purposes at
December 31, 2009, as required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure.
19
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, Nexen Petroleum U.S.A. Inc. has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
DATED: June 23, 2010
NEXEN SAVINGS PLAN
By: Nexen Petroleum U.S.A. Inc.
By: /s/ Brian C. Reinsborough
---------------------------------
Brian C. Reinsborough, President
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
1 Consent of Weaver & Tidwell, L.L.P.