Nexus Retains 100% Stake in Crux Liquids Project

Nexus Energy

Nexus advises that it has terminated a previously announced Heads of Agreement to farm-out an interest in the Crux Liquids Project as a result of a failure of the parties to the agreement to satisfy certain conditions precedent relating to formalization of the agreement.

Nexus is securing a rig slot and plans to drill the Crux-2 appraisal well in December 2006. Nexus also expects to complete front end engineering studies for the project in January 2007. This places the company in a position to make an investment decision on the Crux Liquids project in mid 2007.

Ongoing seismic and reservoir studies continue to confirm the company's previously announced best estimate contingent condensate resources at the Crux field of 71 million barrels of condensate. In addition Nexus' continued engineering work has given the company confidence that production rates at the field may be lifted to rates well above those previously estimated. This production capacity increase reflects the ongoing refinement of the basis of design and equipment optimization for the project as part of the front end engineering process. Nexus has confidence in the potentially increased liquid volumes, enhanced facilities engineering definition and the corresponding benefits to the potential economic value of the Project.

Nexus' position has recently been strengthened by the successful drilling and flow testing of the Longtom-3 appraisal and development well, the A$53 million in cash received from the forward sale of Crux gas to Shell Development (Australia) Pty Ltd and the availability of a A$30 million Longtom bridge finance facility with BOS International (Australia) Limited, part of the Bank of Scotland Group. As a result, Nexus now has the ability to fund the next stage of the Crux liquid project's development internally.

"Going forward, the Company's significantly strengthened financial position will allow us to retain 100% ownership in this important asset through a phase which we believe is likely to deliver a large step up in the value. This may enable the company to introduce a partner at a later stage and may provide the additional flexibility to consider options for the next stage of Crux's development including early commercialization of gas in conjunction with the liquids," Mr. Tchacos added.