Nexus Energy Limited has announced the farm-out of a 20% interest in exploration permit AC/P41 and the commencement of a global process with respect to the sale of an interest in exploration permit AC/P23.
Farm-out of AC/P41
Nexus advised that the farm-out for exploration permit AC/P41, in the Browse Basin, Western Australia, which was the subject of a Memorandum of Understanding announced on September 10, 2008, has been executed with Mitsui E&P Australia Pty Ltd following board approvals of both parties.
Under the agreement, Mitsui will acquire a 20% interest in exploration permit AC/P41 for US $20 million in cash and will fund costs attributable to Nexus' remaining 30% interest for three exploration wells in AC/P41, to the extent of US $34 million. This includes the cost of drilling of the Libra prospect due to spud later this month. As a result, Nexus expects to receive total funding from Mitsui of up to US $30 million in the December quarter of 2008. The farm-out remains subject to a number of conditions, including the right of pre-emption of Nexus' existing joint venture partner and regulatory approvals.
Intention to run global sale process for interest in AC/P23
Nexus previously advised that it had entered into a MOU with respect to a potential sale of a 25% interest in the Crux liquids project in exploration permit AC/P23. The potential sale, for US $255 million valued Nexus' 85% holding in the permit at US $867 million, effective July 1, 2008. The counterparty to the MOU has not received board approval for this purchase citing global market conditions for not proceeding.
Nexus has nevertheless received substantial interest from numerous parties globally with respect to a potential acquisition of equity in AC/P23.
It remains the intention of the Nexus board to seek an additional partner for development of the Crux liquids project and it has been resolved to commence a formal global process with respect to a sale of a substantial interest in AC/P23. The board of Nexus is appointing Deutsche Bank to conduct this process. The process will be initiated shortly and will be governed by strict protocols to ensure genuine competition.
Strong participation in the sale process is expected given the status of the Crux liquids project as a high quality development of substantial scale, located in Australia, and in light of the interest in the project received to date.
Nexus' managing director, Ian Tchacos said, "We are pleased with the execution of the farm-out for AC/P41 in the lead-up to the drilling of the Libra prospect later this month. The Crux liquids project remains an exciting world class development which is close to project sanction. We have received strong interest from potential additional parties and while we are disappointed that the previously announced potential sale will not proceed, we are confident that the sale process will result in the selection of an appropriate additional partner to develop Crux on terms which will be beneficial to Nexus shareholders."
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