Nexus Hits Pay at Longtom-3

Nexus Energy Limited

Nexus Energy Limited said Monday that wire line logging in the deviated pilot hole in the Longtom-3 well has been completed after the well reached a total depth of 3,485 meters measured depth.

The well, located in the Gippsland Basin offshore Australia, successfully encountered 16 meters of net gas sand at the targeted level within the Admiral Formation--some 265 meters deeper than the deepest gas intersection in Longtom-2 (1.1 kilometers away). The gas sand penetrated in the Longtom-3 pilot hole is thinner than was anticipated, but Nexus said this has been partially offset by the better-than-expected gas saturation. The company added that initial indications of porosity and permeability in the gas sand are also encouraging.

This result at Longtom-3 has increased the total gross thickness of gas intersected in the Longtom field from 395 meters to 660 meters, (there is still potential for deeper gas because a gas water contact (GWC) was not observed in the well). The gas has been encountered in a series of independent reservoir units.

Nexus said the Longtom 3 pilot hole suggests that the Admiral Formation reservoir sands are laterally continuous in the vicinity of the three wells drilled on the Longtom field to date because the sands can be correlated between all three wells.

The purpose of the Longtom 3 pilot hole was to accurately locate the deeper gas sands seen in Longtom 2 in order to facilitate well path planning of the horizontal production well. The shallower gas-bearing sands seen in Longtom 1 and Longtom 2 were not anticipated to be gas-bearing in the Longtom -3 pilot hole because they were expected to be intersected below the GWC at the well location.

The results of the well to date indicate that amplitude effects derived from seismic (seismic anomalies) can be used to determine the quality and distribution of gas-filled sands. The use of seismic anomalies is an important tool for optimally locating the Longtom-3 horizontal well and any future Longtom wells.

The pilot hole will now be plugged back in order for the horizontal well bore to be drilled laterally through the Longtom gas sands and tested as originally planned. The Longtom-3 horizontal well section will provide further important appraisal data in relation to the lateral distribution and quality of gas reservoirs in the Longtom field.

Located in permit VIC/P54, Longtom-3 is a sole risk appraisal projected operated and funded by Nexus (37.5%). Apache Northwest Pty Ltd has back-in rights pursuant to joint venture agreements that enable Apache to participate in any potential Longtom development upon the payment of a back-in penalty.