Nexus Awarded Browse Basin Exploration Permit
Nexus Energy has been awarded the petroleum exploration area WA377P in the Browse Basin, including the Echuca Shoals gas discovery offshore of northwest Australia. This area is emerging as a major gas province with several large condensate rich gas accumulations lying in close proximity to the permit area.
WA377P contains the Echuca Shoals 1 gas discovery drilled in 1983. Nexus has interpreted Echuca Shoals to contain a mean recoverable resource potential of 1.3 Tcf gas and 62 million barrels of condensate based on a conservative interpretation. There is considerable upside to these resource estimates as the field may extend further to the north than currently mapped in the mean resource case.
"We regard this to be one of the hottest exploration areas in the country, where condensate rich multi Tcf fields such as the nearby Ichthys, are likely to yield LNG projects in the near future" Nexus Managing Director Ian Tchacos said. He further added "Being awarded this permit which contains the potential for another large condensate rich gas accumulation at Echuca Shoals, is a major coup for Nexus adding to our growing suite of quality oil and gas assets in Australia's premier provinces".
The permit has excellent coverage of recently acquired high quality 3-D seismic which will allow the rapid choice of drilling locations for further appraisal and exploration.
"The proximity of WA377P including the Echuca Shoals gas discovery to the Crux Field which lies about 120 km to the north east provides a significant opportunity for Nexus to maximize the value of the two assets."
"Securing this permit with condensate rich gas provides the opportunity for Nexus to pursue a broader development strategy in the area utilizing potential development synergies between Crux and Echuca Shoals," Mr. Tchacos added.
The project area is also a candidate for development as a gas condensate project in a similar way to Crux. This could see the condensate commercialized prior to a market being secured for the gas.
The 330 square kilometer permit area is immediately adjacent to Shell Development Australia's WA-371P block. Shell has a committed work program on that block which includes drilling 12 wells. This is the most significant and aggressive drill program undertaken in recent years and underscores the exploration potential of the area.
A further compelling reason for Nexus to pursue WA377P is the fact that gas has been discovered in several other reservoir sections in nearby fields including Ichthys and Gwydion.
These discoveries represent play types that may be present in WA377P.
The Echuca Shoals # 1 well encountered two independent gas columns in Berriasian and Tithonian aged sandstones. The deeper Tithonian aged gas accumulation contains the bulk of the discovered gas.
While no sample of reservoir fluid was recovered from the well, wireline log data clearly identifies a major gas accumulation. Density information obtained from pressure data in the well indicates that the gas is rich in condensate.
Nexus' work program includes the purchase or acquisition of 150 square kilometers of 3D seismic data in the first year of the permit term to mature a drilling target before a well is drilled in the second permit year. Subject to rig availability Nexus will attempt to accelerate the drilling in this permit to the first half of 2007.
"This is a very exciting project for Nexus, acquired at a relatively low committed work program. We hold 100% equity in the permit. The resource potential as a gas liquids project is similar to that of Crux. It also represents a significant gas resource as an add on to any potential LNG development in the area.
"At a time when major oil companies are focusing on LNG as a way of fuelling the energy hungry Asia Pacific region Nexus is building a significant discovered gas and condensate resource base (currently approx 2.6 TCF of gas and 110 million barrels of condensate) in a major gas province in relatively shallow water. We are operating in a politically stable environment close to major energy markets which is a considerable advantage," Mr. Tchacos said.
Securing this permit is consistent with Nexus' ongoing strategy of ground floor acquisition of high quality exploration/appraisal opportunities in Australia at significant equity levels. Nexus' high equity level enables the company to pursue its successful strategy of attracting Joint Venture partners via farm out to secure funding for drilling. This minimizes Nexus' drilling costs while retaining a large exposure to the value created in the case of success.
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