Nexus Energy Limited has signed a Memorandum of Understanding with a substantial and financially capable international energy company for the sale of an interest in exploration permits AC/P23 and AC/P41 in the Browse Basin, Western Australia.
Nexus commenced a sale process for an interest in the Crux liquids project during the second quarter of 2008 as the project reached an advanced state of definition. The intention of the sale process has been to maximize the amount of funding provided to Nexus, to enhance the ability to secure project financing for the impending development of the Crux liquids project, to secure a complementary joint venture partner and to capture some of the value created by the Crux liquids project to date.
A select number of parties were approached who were considered financially capable, had significant LNG credentials and were expected to be a complementary joint venture participant (recognizing the potential of Crux and the adjoining exploration permit AC/P41 to contain LNG scale resources).
Under the terms of the MOU, which is subject to board approvals of the Farminee and Nexus by October 8, 2008, the Farminee will acquire a 25% interest in the Crux liquids project in exploration permit AC/P23 and a 20% interest in exploration permit AC/P41. The Farminee will pay US $275 million (approximately A$342 million) in cash and will fund Nexus' costs for three wells in exploration permit AC/P41 (including the Libra prospect), to the extent of US $34 million (approximately A$42 million).
Assuming the Board approvals are obtained, the completion of the transaction will be subject to a number of conditions including approvals and pre-emption rights of existing joint venture partners, and governmental and regulatory approvals. The transaction is expected to be completed in the fourth quarter of 2008 with an effective date of July 1, 2008. The name of the Farminee will be disclosed after necessary MOU approvals have been obtained.
Nexus' Managing Director Ian Tchacos said, "This is an excellent outcome which demonstrates the rapidly increasing value of the Crux asset together with the near field potential in exploration permit AC/P41. We are looking forward to introducing another highly regarded international partner to the Crux liquids project and to the broader task of fully exploring the greater Crux area.
"Assuming necessary approvals are secured, we expect that this Farminee will provide valuable complementary skills to the Crux liquids project. Crux is a world scale resource project which can only be further enhanced by the introduction of a financially capable partner. The funding from this transaction is expected to provide a significant contribution to funding Nexus' share of the Crux liquids project and enhance our ability to secure project finance on favorable terms."
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