Nexus Accepts Shell's Offer for AC/P23 Permit
Nexus has accepted an offer from Shell Development Australia Pty Ltd to purchase 100% of Nexus' rights in relation to the gas (excluding the condensate) in the AC/P23 exploration permit (which contains the Crux gas-condensate field).
Shell's offer contains key commercial principles for the sale but is subject to the finalization and execution of definitive agreements as well as the receipt of necessary approvals.
The principal terms of the offer are:
- Shell will pay for the rights in relation to the gas upon execution of agreements
- Nexus will retain a 100% interest and operatorship of the gas-condensate recycle project and any other liquid hydrocarbons in AC/P23
- Nexus is free to deal with its interest in the gas-condensate recycle project providing it does not affect Shell's rights in relation to the gas
- Shell will have the right to take dry gas from AC/P23 at any time provided it doesn't adversely affect the gas-condensate recycle project
- An exclusivity period will exist in relation to the Gas sale until the parties conclude definitive contract negotiations
The Independent Expert in Nexus' recent Target's Statement, issued on May 3, 2006, assessed the most likely value of Nexus' Browse Basin gas resources (including Crux and Echuca Shoals) to be A$41.9 million. The offer from Shell for the AC/P23 gas exceeds this value.
The deal will enable Nexus to undertake its gas-condensate recycle project as planned.
As indicated in previous Nexus announcements, Nexus is also reviewing proposals to farmout an interest in the planned gas-condensate recycling project. Under such a proposal, it is expected that the incoming farminee would fund 100% of the planned Crux appraisal well and feasibility engineering prior to expected project sanction in the first quarter of 2007.
"We are very pleased to have attracted an offer from one of the world's largest oil and gas companies. Nexus has been able to extract upfront value from a remote gas resource in less than 6 months – a fantastic achievement when viewed in relation to other major gas resources in the region, which have stood idle for more than 35 years. Nexus is also mindful that the deal represents good value for Shell as it adds to Shell's Browse Basin gas assets. We are pleased to be able to facilitate this truly win-win arrangement between our companies," said Ian Tchacos, Nexus' Managing Director.
"This offer provides Nexus with sufficient additional funding in the near term to progress its gas-condensate recycle project at Crux as well as the appraisal of the Echuca Shoals gas condensate resource. The rapid progress we are making in the Browse basin with Crux and Echuca shoals is very encouraging," said Ian Tchacos, Nexus' Managing Director.
Crux is a substantial gas and condensate resource in an emerging LNG province. Nexus acquired the asset for $12m in 2005 and has maintained a 100% interest in the Crux field and is appraising the asset with the intention of commencing its development phase by the second quarter of 2007. The field lies some 100 km to the north east of the 100% Nexus owned WA-377-P permit which contains the significant Echuca Shoals gas discovery which is adjacent to Inpex's Ichthys gas field, currently being considered for development as an LNG project.
In January 2006 Nexus commissioned a new 280 km² 3D seismic survey over the Crux field. This survey was completed in March 2006 and new structure maps for the Crux field have been generated using the new velocity data. Nexus believes these maps confirm additional resource potential in the north eastern part of the field. Nexus' best estimates of the Crux field contingent resources are 71 million barrels of condensate and 2 Tcf of gas.
Preparation for the drilling of the appraisal well, Crux #2, in Q4 of this year is underway. Nexus is actively seeking a rig slot and is purchasing the required drilling materials which will allow the well to be drilled when a slot does become available.
The next step in the forward plan for the project will be the completion of the front end engineering and design (FEED), which will incorporate the results from both the new 3D seismic data and the Crux #2 appraisal well.
The FEED will provide detailed design information on key components of the project. This
information will be used by companies that will tender for the supply of the project's floating
production storage and offload facility (FPSO) later in the year. In March 2006 Nexus
appointed Mustang Engineering, an internationally respected engineering company, to
execute the FEED and the work is progressing on schedule.
Operates 30 Offshore Rigs
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