The substantial increases of recoverable hydrocarbon volumes in Nexus Energy Limited's ("Nexus") Crux field in the Browse Basin announced on 19 March 2008 have been confirmed following a review by independent auditor Gaffney, Cline and Associates ("GCA").
In line with previous announcements following the Crux-3 and Crux-4 appraisal wells, the Nexus board has accepted the audited contingent resource estimates as a basis for booking reserves in the development area of the Crux field, located in exploration permit AC/P23, off the north west coast of Western Australia.
The Crux development area includes that part of the Crux field defined by the existing appraisal wells within AC/P23. It is this area that Nexus and its partner Osaka Gas, plan to develop via the Crux liquids project.
The revised volumes are the result of further review by Nexus as well as an independent assessment by external independent expert, GCA. The volumes were certified by GCA as Contingent Resources as the project has not yet been officially sanctioned and GCA has not assessed the commerciality of the Condensate Resource volumes.0
However, Nexus has subsequently booked these volumes as Reserves on the basis of the Crux project being deemed by the board of Nexus to be economic and reflecting the board's commitment to proceed with the project.
The confirmed increases in the P90 and P50 volume estimates substantially boost the commercial value of the Crux liquids project and enhance Nexus' ability to procure project finance on attractive terms.
Both the Crux-3 and Crux-4 wells intersected previously unseen younger Montara Formation gas-charged sand overlying the older Plover and Nome Formation sands which had been seen in the earlier Crux-1, Crux-2 and Crux-2 ST1 wells. The Crux-4 well successfully appraised the previously undrilled south east horst block in the field.
The results from these wells have been incorporated into an updated top reservoir map which highlights the potential for the Libra and Auriga prospects to form part of a much larger Crux accumulation. This will be tested by the upcoming Libra-1 well to be drilled in exploration permit AC/P41, scheduled to start drilling in May 2008. Nexus will provide a further update on the Crux area resources after the Libra-1 well is drilled.
Nexus managing director, Ian Tchacos said, "The confirmation of the increase in reserves following the successful Crux-3 and Crux-4 wells is a significant milestone in commercialising the Crux liquids project."
"The reserves quoted in this release are limited to the Crux liquids development area and do not include the very prospective near field exploration potential in AC/P23 and the adjacent AC/P41 permit which will be appraised during the coming year."
"We learn more about the potential of this exciting gas and liquids resource with every well we drill. Nexus is looking forward to potential further increases in its reserves base via an active drilling program in AC/P23 with our joint venture partner, Osaka Gas, and the imminent start of a drilling campaign in AC/P41 with our 50/50 partner, Shell."
"The exploration drilling program during 2008 within the AC/P23 and AC/P41 permits has the potential to more than double the current gas and liquids resources, thereby potentially defining a LNG project scale gas resource at Crux as well as additional liquids reserves which could be incorporated into the Crux liquids project.
"Drilling on the Libra-1 prospect in AC/P41 is scheduled to commence in May 2008. Nexus believes that the recent results from Crux-3 and Crux-4 significantly enhance the outlook for the Libra prospect and follow up potential at the Auriga prospect in AC/P23." Mr Tchacos said.
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