**Exhibit10.56**

** **

**NEXEN INC.**

 

**TANDEMOPTION PLAN**

 

1.             BACKGROUND AND PURPOSEOF PLAN

 

1.1           ThePlan was established effective February 27, 1998 and subsequently amended December 15,1998, September 15, 1999, April 17, 2000, May 2, 2001, May 6,2003, July 1, 2004 (at which time the Plan was renamed the “Tandem OptionPlan”) and June 30, 2007.

 

1.2           Thepurpose of the Plan is to assist directors, officers and employees of theCorporation and any Subsidiary to participate in the growth and development ofthe Corporation and its Subsidiaries by providing Eligible Persons with theopportunity, through share options, to acquire an increased proprietaryinterest in the Corporation that will be aligned with the interests of theshareholders of the Corporation.

 

2              DEFINED TERMS

 

In the Plan, the following terms shall have thefollowing meanings, respectively:

 

2.1           “Affiliate”and “Associate” have the meaning ascribed to such terms in the CBCA;

 

2.2           “ActingJointly or in Concert” - For the purposes of the Plan, a Person is actingjointly or in concert with another Person if such Person has any agreement,arrangement or understanding (whether formal or informal and whether or not inwriting) with such other Person for the purpose of acquiring, or offering toacquire any Shares (other than customary agreements with and betweenunderwriters and banking group or selling group members with respect to adistribution of securities by way of prospectus or private placement orpursuant to a pledge of securities in the ordinary course of business);

 

2.3           “BeneficialOwner” - For the purposes of the Plan, a Person shall be deemed to be the “BeneficialOwner” and to have “Beneficial Ownership” of and to “BeneficiallyOwn”:

 

(i)            anysecurities as to which such Person or any of such Person’s Affiliates orAssociates is the owner at law or in equity;

 

(ii)           anysecurities as to which such Person or any of such Person’s Affiliates orAssociates has a right to acquire (a) upon the exercise of any ConvertibleSecurities or (b) pursuant to any agreement, arrangement or understanding,whether such right is exercisable immediately or within a period of 60 daysthereafter and whether or not on condition or the happening of any contingency,(other than (I) customary agreements with and between underwriters andbanking group and selling group members

 

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with respect to the distribution to the public or pursuant to a privateplacement of securities, or (II) pursuant to a pledge of securities in theordinary course of business); and

 

(iii)          any securities which are Beneficially Ownedwithin the meaning of clauses (i) or (ii) above by any other Personwith which such Person is Acting Jointly or in Concert:

 

provided, however, that a Person shall notbe deemed the “Beneficial Owner” or to have “Beneficial Ownership” of or to “BeneficiallyOwn” any security where such Person is the registered holder of securities asthe result of carrying on the business of or acting as nominee for a securitiesdepository.

 

For purposes of the Plan, the percentage ofShares Beneficially Owned by any Person, shall be and be deemed to be theproduct determined by the formula:

 

100 x A/B

 

A =         thenumber of votes for the election of all directors generally attaching to theShares Beneficially Owned by such Person; and

 

B =          thenumber of votes for the election of all directors generally attaching to alloutstanding Shares.

 

For the purposes of the foregoing formula,where any Person is deemed to Beneficially Own unissued Shares which may beacquired pursuant to Convertible Securities, such Shares shall be deemed to beoutstanding for the purpose of calculating the percentage of SharesBeneficially Owned by such Person in both the numerator and the denominator,but no other unissued Shares which may be acquired pursuant to any other outstandingConvertible Securities shall, for the purposes of that calculation, be deemedto be outstanding;

 

2.4           “Board”means the board of directors of the Corporation or, if established and dulyauthorized to act with respect to this Plan, any committee of the board ofdirectors of the Corporation;

 

2.5           “BusinessDay” means any day, other than a Saturday or a Sunday, on which theExchange is open for trading;

 

2.6           “CBCA”means the *Canada Business Corporations Act* asamended from time to time and any successor legislation thereto;

 

2.7           “Changeof Control” means when any Person directly becomes the Beneficial Owner of50% or more of the Shares;

 

2.8           “Changeof Control Event” has the meaning ascribed to it in Section 8.1;

 

2.9           “ConvertibleSecurities” means at any time:

 

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(i)            anyright (contractual or otherwise and regardless of whether such rightconstitutes a security) to acquire Shares; and

 

(ii)           anysecurities issued by the Corporation from time to time (other than the Rights)carrying any exercise, conversion or exchange right;

 

which is then exercisable or exercisablewithin a period of 60 days from that time pursuant to which the holder thereofmay acquire Shares or other securities which are convertible into or exercisableor exchangeable for Shares (in each case, whether such right is thenexercisable or exercisable within a period of 60 days from that time andwhether or not on condition or the happening of any contingency);

 

2.10         “Corporation”means Nexen Inc. or any successor entity in relation thereto;

 

2.11         “EligiblePerson” means any director, officer or employee of the Corporation or anySubsidiary;

 

2.12         “Exchange”means the Toronto Stock Exchange and, where the context permits, any otherexchange on which the Shares are or may be listed from time to time;

 

2.13         “ExercisePrice” means the price per Share at which Shares may be purchased under theOption, as the same may be adjusted from time to time in accordance with Article 8;

 

2.14         “Insider”means:

 

(i)            aninsider as defined under Section 1(aa) of the *SecuritiesAct* (Alberta) other than a Person who falls within that definitionsolely by virtue of being a director or officer of a Subsidiary; and

 

(ii)           anassociate as defined under Section 1(c) of the *SecuritiesAct* (Alberta) of any Person who is an insider by virtue of (i) above;

 

2.15         “Inthe Money” means the excess, if any, of the Market Price of a Share at anytime over the Exercise Price;

 

2.16         “MarketPrice” at any date in respect of the Shares shall be either:

 

(i)            forthe purposes of determining the Exercise Price, the closing price of the Shareson the Exchange on the last Business Day preceding the date on which the Optionis approved by the Board; and, for the purposes of determining the In the Moneyamount, the closing price of the Shares on the Exchange on the date ofsurrender of the Option, or if there is no trading of the Shares on theExchange that day, the last Business Day preceding the date of surrender of theOption; or

 

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(ii)           inthe discretion of the Board, such price as may be determined by any mechanismfor establishing the market value of the Shares approved by the Board.  Any such determination or mechanism shall bepre-cleared with the Exchange;

 

2.17         “Option”means an option to purchase Shares granted under the Plan;

 

2.18         “Optionee”means an Eligible Person to whom an Option has been granted;

 

2.19         “Person”includes an individual, partnership, association, body corporate, trustee,executor, administrator, legal representative and any national, provincial,state or municipal government;

 

2.20         “Plan”means this Nexen Inc. Tandem Option Plan, as amended from time to time;

 

2.21         “Rights”means the rights distributed pursuant to the Amended and Restated ShareholderRights Plan Agreement between the Corporation and CIBC Mellon Trust Companydated May 2, 2002, as amended or superseded from time to time;

 

2.22         “ShareCompensation Arrangement” means any stock option, stock option plan, employeestock purchase plan or any other compensation or incentive mechanism involvingthe issuance or potential issuance of Shares, including a share purchase fromtreasury which is financially assisted by the Corporation by way of a loan,guarantee or otherwise;

 

2.23         “Shares”means the common shares of the Corporation, or, in the event of an adjustmentcontemplated by Article 8, such other shares or securities to which anOptionee may be entitled upon the exercise of an Option as a result of suchadjustment; and

 

2.24         “Subsidiary”means any subsidiary of the Corporation within the meaning of the CBCA.

 

3.             ADMINISTRATION OF THEPLAN

 

3.1           ThePlan shall be administered by the Board.

 

3.2           TheBoard shall have the power, where consistent with the general purpose andintent of the Plan and subject to the specific provisions of the Plan, to:

 

(i)            establishpolicies and to adopt rules and regulations for carrying out the purposes,provisions and administration of the Plan;

 

(ii)           interpretand construe the Plan and to determine all questions arising out of the Planand any Option granted pursuant to the Plan, and any such interpretation,construction or determination made by the Board shall be 

 

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final, binding and conclusive for all purposes on the Corporation andthe Optionee;

 

(iii)          grant Options;

 

(iv)          determinewhich Eligible Persons are granted Options;

 

(v)           determinethe number of Shares covered by each Option;

 

(vi)          determinethe Exercise Price;

 

(vii)         determine the time or times when Options willbe granted and exercisable;

 

(viii)        determine if the Shares that are subject to anOption will be subject to any restrictions or conditions upon the exercise orsurrender of such Option, including conditions in respect of the financialperformance or results of the Corporation or its Subsidiaries; and

 

(ix)           prescribethe form of documents relating to the grant, exercise, surrender and otherterms of Options.

 

4.             SHARES SUBJECT TO PLAN

 

4.1           Optionsmay be granted in respect of authorized and unissued Shares, provided that theaggregate number of Shares reserved for issuance under this Plan, subject toadjustment or increase of such number pursuant to the provisions of Section 8.4,shall not exceed 14,250,000 Shares (being the original 6,000,000 Sharesauthorized as of February 27, 1998, plus the 3,500,000 additional Sharesauthorized in accordance with the requirements of Section 8.4 as of May 2,2001, and the 2,000,000 additional Shares authorized in accordance with therequirements of Section 8.4 as of May 6, 2003 plus the 2,750,000additional Shares authorized effective July 1, 2004), which shall notinclude options under stock option agreements outstanding at the date of thePlan whether continued hereunder pursuant to Section 14.1 hereof orcontinued under the terms of the applicable agreement in effect at the date ofthe Plan.  Shares in respect of which: i)Options are not exercised, or ii) Options are surrendered in exchange for theIn the Money amount, shall be available for subsequent Options under thePlan.  No fractional Shares may bepurchased or issued under the Plan.

 

5.             ELIGIBILITY, GRANT ANDTERMS OF OPTIONS

 

5.1           Optionsmay be granted to directors, officers or employees of the Corporation or of anySubsidiary.

 

5.2           Exceptas otherwise provided for in this Plan, the number of Shares subject to eachOption, the Exercise Price, the expiration date of each Option, the extent towhich each Option is exercisable or may be surrendered from time to time duringthe term of the Option and other terms and conditions relating to each suchOption 

 

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shall be determined by the Board; provided, however, that if nospecific determination is made by the Board with respect to any of thefollowing matters, each Option shall, subject to any other specific provisionsof the Plan, contain the following terms and conditions:

 

(i)

 

(a)           forOptions granted up to and including February 15, 2001, the period duringwhich an Option shall be exercisable shall be ten years from the date theOption is granted to the Optionee; and

 

(b)           forOptions granted from February 16, 2001 forward, the period during which anOption shall be exercisable shall be five years from the date the Option isgranted to the Optionee; and

 

(ii)

 

(a)           subjectto Section 8.2, for Options granted up to and including February 15,2001, the Option shall vest as to 20% of the number of Shares granted by eachOption on the date six months after the grant of the Option and as to 25% ofthe remaining number of Shares on each of the first through fourthanniversaries of the initial granting of such Option; and

 

(b)           subjectto Section 8.2, for Options granted from February 16, 2001 forward,the Option shall vest as to one third of the number of Shares granted by eachOption on each of the first, second and third anniversaries of the initialgranting of such Option; and

 

(c)           theExercise Price, unless otherwise determined by the Board and subject toregulatory approval, shall not be less than the closing price of the Shares onthe Exchange on the last Business Day preceding the date on which the Option isgranted by the Board, or if there is no trading of the Shares on the Exchangeon that day, then a weighted average trading price for the 5 trading days onthe Exchange prior to the date of grant shall be used; and

 

(d)           irrespectiveof the date of grant of such Option, the Optionee shall, subject to vestingrequirements and the requirements of Section 7.1, be entitled to elect tosurrender such Option or any portion thereof (as to a whole number of Shares)in exchange for the In the Money amount of Shares in respect of which suchOption is surrendered.

 

5.3           NotwithstandingSection 5.2 of the Plan, where new directors or officers are appointed,new employees hired or directors, officers or employees promoted, the ChiefExecutive Officer of the Corporation shall have the authority to grant 

 

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Options to such directors, officers or employees, including thedetermination of the matters provided for in Section 5.2.  The Chief Executive Officer shall report tothe Board with respect to all Options granted under this Section 5.3.

 

5.4           Unlessthe Board shall otherwise determine, no separate agreement between theCorporation and the Optionee shall be necessary to create and grant any Option,and the Board may, by resolution, create and grant Options and stipulate suchadditional terms as are consistent with this Plan.

 

5.5           TheExercise Price on Shares that are subject to any Option shall in nocircumstances be lower than the Market Price of the Shares at the date of thegrant of the Option.  Subsequent to thedate of grant of an Option, subject to adjustments made pursuant to Section 8.4,the Exercise Price of the Option shall not be reduced except in accordance withthe rules of the Exchange, including any shareholder approval requirementsstipulated by the Exchange in respect of such reduction in the Exercise Price.

 

5.6           Thetotal number of Shares to be optioned to any Optionee under this Plan and anyother Share Compensation Arrangement shall not exceed 5% of the issued andoutstanding Shares (on a non-diluted basis) at the date of the grant of theOption.

 

5.7           Themaximum number of Shares which may be reserved for issuance to Insiders underthe Plan shall be 10% of the Shares outstanding at the time of the grant (on anon-diluted basis), less the aggregate number of Shares reserved for issuanceto Insiders under any other Share Compensation Arrangement.

 

5.8           Themaximum number of Shares which may be issued to Insiders under the Plan withina one year period shall be 10% of the Shares outstanding at the time of theissuance (on a non-diluted basis), excluding Shares issued under the Plan orany other Share Compensation Arrangement over the preceding one yearperiod.  The maximum number of Shareswhich may be issued to any one Insider under the Plan or any other ShareCompensation Arrangement within a one year period shall be 5% of the Sharesoutstanding at the time of the issuance (on a non-diluted basis), excludingShares issued to such Insider under the Plan or any other Share CompensationArrangement over the preceding one year period.

 

5.9           Anyentitlement to acquire Shares granted pursuant to the Plan or any other ShareCompensation Arrangement prior to the Optionee becoming an Insider shall beexcluded for the purposes of the limits set out in Sections 5.7 and 5.8above.

 

5.10         AnOption is personal to the Optionee and is non-transferable and non-assignableother than to the estate of an Optionee by operation of law.

 

5.11         Participationin the Plan shall be entirely voluntary and any decision not to participateshall not affect any Eligible Person’s employment or appointment with theCorporation or any of its Subsidiaries.

 

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5.12         Subjectto deletion of this Section 5.12 effective July 1, 2004 pursuant to Section 14.2,the maximum number of shares which may be issued to all non-executive directorsof the Corporation shall not exceed 0.25% of the outstanding shares of theCorporation.

 

6.             TERMINATION OFEMPLOYMENT

 

6.1           AnOptionee’s Options shall terminate and may not be exercised or surrenderedafter the earliest of:

 

(i)            eighteenmonths after the Optionee’s termination of active employment with theCorporation or any of its Subsidiaries by reason of death or retirement fromactive employment;

 

(ii)           theOptionee’s termination of active employment with the Corporation or any of itsSubsidiaries for cause;

 

(iii)          ninety days after the Optionee’s terminationof active employment with the Corporation or any of its Subsidiaries, direct orindirect, in any manner or for any reason, other than death, retirement ortermination of employment for cause; and

 

(iv)          theexpiry of an Option in accordance with the terms thereof.

 

For the purposes of this Plan a directorshall be deemed to be an employee.

 

6.2           Optionsshall not be affected by any change of employment of the Optionee or by theOptionee ceasing to be a director where the Optionee continues to be employedon a full-time basis by, or continues to be a director or officer of, theCorporation or any Subsidiary.

 

7.             EXERCISE OR SURRENDEROF OPTIONS

 

7.1           Subjectto the provisions of the Plan, an Option may be exercised or surrendered fromtime to time by delivery to the Corporation at its head office of a writtennotice addressed to the Stock Administration Group specifying:

 

(i)            thenumber of Shares, if any, with respect to which the Option is being exercised;and

 

(ii)           thenumber of Shares, if any, with respect to which the Optionee is surrenderingsuch Option and electing to receive the In the Money amount,

 

accompanied by payment in full of theExercise Price of the Shares to be purchased as specified pursuant to Section 7.1(i).  Certificates for any Shares purchased by theOptionee shall be issued and delivered to the Optionee within a reasonable timefollowing the receipt of such notice and payment.  A cheque or 

 

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similar means of payment for the In theMoney amount of Shares specified in Section 7.1(ii) (subject to anyapplicable withholding of taxes) shall be delivered to the Optionee within areasonable time following the receipt of such notice.  The effective date of surrender of an Optionshall be deemed to be the date of delivery to the Corporation of a noticepursuant to Section 7.1(ii).  Thetotal number of Shares in respect of which an Option is exercised pursuant to Section 7.1(i) fromtime to time together with the total number of Shares in respect of which anOption is surrendered pursuant to Section 7.1(ii) from time to timeshall not exceed the number of Shares subject to such Option.

 

7.2           Notwithstandingany of the provisions contained in the Plan or in any Option, the Corporation’sobligation to issue Shares to an Optionee pursuant to the exercise of an Optionshall be subject to:

 

(i)            completionof such registration or other qualification of such Shares or obtainingapproval of such governmental authority as the Corporation shall determine tobe necessary or advisable in connection with the authorization, issuance orsale thereof;

 

(ii)           thelisting of such Shares on any stock exchange on which the Shares may then belisted; and

 

(iii)          the receipt from the Optionee of suchrepresentations, agreements and undertakings, including as to future dealingsin such Shares, as the Corporation or its counsel determines to be necessary oradvisable in order to safeguard against the violation of the securities laws ofany jurisdiction.

 

In this connection the Corporation shall,to the extent necessary, take all reasonable steps to obtain such approvals,registrations and qualifications as may be necessary for the issuance of suchShares in compliance with applicable securities laws and for the listing ofsuch Shares on any stock exchange on which the Shares are then listed.

 

8.             CHANGE OF CONTROL ANDCERTAIN ADJUSTMENTS

 

8.1           In this Article 8:

 

(i)            “Change of ControlEvent” means:

 

(a)           theentry by the Corporation into an agreement with respect to a reorganization,merger, amalgamation or other combination, the completion of which would resultin a Change of Control;

 

(b)           a“formal bid” (as defined under the securities legislation of any Canadianprovince) or “tender offer” (as defined under the United States *Securities Exchange Act of 1934*), the completion of whichwould result in a Change of Control; or

 

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(c)           thedetermination by the Board that a Change of Control has occurred, other thanpursuant to Section 8.1(i)(a) or 8.1(i)(b) above.

 

8.2           Immediatelyafter the occurrence of a Change of Control Event, all outstanding Options thathave not yet vested shall vest and become exercisable or may be surrendered.

 

8.3           IfOptions have vested pursuant to Section 8.2 and the Change of ControlEvent is not completed, the Corporation shall make such arrangements as theBoard of Directors considers advisable in the circumstances to restore theCorporation and the Optionees to the position they would have been in had thepurported Change of Control Event not occurred.

 

8.4           Appropriateadjustments as regards Options granted or to be granted, in the number ofShares optioned and in the Exercise Price, shall be made by the Board to giveeffect to adjustments in the number of Shares resulting from subdivisions,consolidations, capital reorganizations or reclassifications of the Shares, thepayment of stock or extraordinary dividends by the Corporation (other thandividends in the ordinary course) or other relevant changes in the capitalstock of the Corporation.  Theappropriate adjustment in any particular circumstance shall be conclusivelydetermined by the Board in its sole discretion, subject to approval by theshareholders of the Corporation and to acceptance by the Exchange,respectively, if applicable.

 

9.             AMENDMENT ORDISCONTINUANCE OF PLAN

 

9.1           TheBoard may amend, suspend or discontinue the Plan at any time; provided,however, that no such amendment may increase the maximum number of Shares thatmay be optioned under the Plan, change the manner of determining the ExercisePrice or, without the consent of the Optionee, adversely alter or impair anyOption previously granted to an Optionee under the Plan.

 

9.2           Noamendment, suspension or discontinuance of the Plan may contravene therequirements of the Exchange or any securities commission or regulatory body towhich the Plan or the Corporation is now or may hereafter be subject to.

 

10.           ACCOUNTS AND STATEMENTS

 

10.1         TheCorporation shall maintain records of the details of each Option granted toeach Optionee under the Plan. Upon request therefor from an Optionee and atsuch other times as the Corporation shall determine, the Corporation shallfurnish the Optionee with a statement setting forth details of his or herOptions. Such statement shall be deemed to have been accepted by the Optioneeas correct unless written notice to the contrary is given to the Corporationwithin 10 days after such statement is given to the Optionee.

 

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11.           PROHIBITION ON FINANCIALASSISTANCE

 

11.1         TheCorporation shall not arrange for the Corporation or any affiliated entity tomake loans, provide guarantees for loans by financial institutions or provide otherassistance or support to assist an Optionee to purchase Shares upon theexercise of Options.

 

12.           NOTICES

 

12.1         Anypayment, notice, statement, certificate or other instrument required orpermitted to be given to an Optionee or any Person claiming or deriving anyrights through him shall be given by:

 

(i)            deliveringit personally to the Optionee or the Person claiming or deriving rights to him,as the case may be; or

 

(ii)           mailingit, postage paid (provided that the postal service is then in operation) ordelivering it to the address which is maintained for the Optionee in theCorporation’s or the Subsidiary’s (as the case may be) personnel records.

 

12.2         Anypayment, notice, statement, certificate or instrument required or permitted tobe given to the Corporation shall be given by mailing it, postage prepaid(provided that the postal service is then in operation) or delivering it to theCorporation at the following address:

 

Nexen Inc.

801 - 7th Avenue S.W.

Calgary, Alberta, Canada

T2P 3P7

 

Attention:  StockAdministration Group

 

12.3         Anypayment, notice, statement, certificate or instrument referred to in Article 8or Sections 12.1 or 12.2, if delivered, shall be deemed to have been givenor delivered, on the date on which it was delivered or, if mailed (providedthat the postal service is then in operation), shall be deemed to have beengiven or delivered on the second business day following the date on which itwas mailed.

 

13.           SHAREHOLDER ANDREGULATORY APPROVAL

 

13.1         ThePlan shall be subject to the approval of the shareholders of the Corporation tobe given by a resolution passed at a meeting of the shareholders of theCorporation in accordance with the *Canada BusinessCorporations Act* and to acceptance by the Exchange.  Any Options granted prior to such approvaland acceptance shall be conditional upon such approval and acceptance beinggiven and no such Options may be exercised unless and until such approval andacceptance is given.

 

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14.           TRANSITIONAL PROVISIONS

 

14.1         Astock option agreement entered into between the Corporation and an Optionee,that remains outstanding on the effective date of this Plan shall, with thewritten consent of the Optionee party thereto, continue in full force andeffect under the terms of this Plan as if initially granted hereunder. If suchwritten consent is not obtained from such Optionee, such stock option agreementshall continue in full force and effect under the terms of the applicableagreement.

 

14.2         EffectiveJuly 1, 2004, “Eligible Person” as defined in Section 2.11 of thePlan is amended to delete the reference in such definition to “director” andcorresponding and concurrent changes are made to delete use of the word “directors”in Sections 1.2, 5.1 and 5.3, and to delete Section 5.12 and the lastsentence of Section 6.1 in their entirety. Notwithstanding this Section 14.2, any Options granted to adirector of the Corporation or any Subsidiary prior to July 1, 2004 andoutstanding on such date shall remain outstanding and unvaried by the firstsentence of this Section 14.2 until the expiry, exercise or surrender ofsuch Options in accordance with their terms.

 

15.           MISCELLANEOUS

 

15.1         Theholder of an Option shall not have any rights as a shareholder of the Corporationwith respect to any of the Shares covered by such Option until such holdershall have exercised such Option in accordance with the terms of the Plan andthe Shares issued by the Corporation.

 

15.2         TheCorporation or a Subsidiary may withhold from any amount payable to anOptionee, either under this Plan, or otherwise, such amount as may be necessaryso as to ensure that the Corporation or the Subsidiary will be able to complywith the applicable provisions of any federal, provincial, state or local lawrelating to the withholding of tax or other required deductions, including onthe amount, if any, required to be included in the income of an Optionee.

 

15.3         Nothingin the Plan or any Option shall confer upon any Optionee any right to continuein the employ of the Corporation or any Subsidiary of the Corporation or affectin any way the right of the Corporation or any such Subsidiary to terminate hisor her employment at any time; nor shall anything in the Plan or any Option bedeemed or construed to constitute an agreement, or an expression of intent, onthe part of the Corporation or any such Subsidiary to extend the employment ofany Optionee beyond the time that he or she would normally be retired pursuantto the provisions of any present or future retirement plan of the Corporationor any Subsidiary or any present or future retirement policy of the Corporationor any Subsidiary, or beyond the time at which he or she would otherwise beretired pursuant to the provisions of any contract of employment with theCorporation or any Subsidiary.

 

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15.4         Tothe extent required by law or regulatory policy or necessary to allow Sharesissued on exercise of an Option to be free of resale restrictions, the Corporationshall report the grant, exercise or termination of the Option to the Exchangeand the appropriate securities regulatory authorities.

 

15.5         ThisPlan shall be construed and interpreted in accordance with the laws of Alberta.

 

15.6         Inthis Plan, unless the context otherwise requires, words importing genderinclude the masculine and feminine and words importing a singular numberinclude the plural and vice versa.

 

15.7         Ifany provision of this Plan is determined to be void, the remaining provisionsshall be binding as though the void parts were deleted.

 

15.8         Nomember of the Board shall be liable for any action or determination made ingood faith in connection with the Plan and members of the Board shall beentitled to indemnification and reimbursement from the Corporation in respectof any claims relating thereto.

 

Dated June 30,2007

 
| ** ** | **NEXEN  INC.** |
|------------|-----------------|
| ** ** | ** **      |
| ** ** | ** **      |
|       | Per:            | /s/ Randy J.  Jahrig |
|       |            | Vice  President, |
|       |            | Human  Resources and Corporate Services |
|       |            |   |
|       | Per:            | /s/ Sylvia  L. Groves |
|       |            | Assistant  Secretary |

 

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