Nexus Encouraged by Crux Review Findings
Nexus Energy Limited said that it has completed a preliminary resource evaluation for the Crux field in the Timor Sea that incorporates the results of the Crux-2 well.
The company has also undertaken an economic review of the project across a range of development scenarios utilizing costs from recently completed front end engineering and design ("FEED") work.
Nexus would also like to report that drilling has recommenced on the "Crux-2 Side Track-1" well following an interruption to operations by tropical cyclone George. The well is currently forecast to reach the reservoir objective by 25 March 2007.
The key results from the technical and economic review are summarized as follows:
--The revised best estimate contingent resource for the field is 55 million barrels within the AC/P23 permit yielding a pre-tax net present value of A$710 million at a discount rate of 10% --Down hole gas samples recovered from Crux-2 indicates the liquids content of the gas in the Crux field is 30% higher than previously calculated at Crux-1. A 10% increase has been assumed in this revision of the resource evaluation --The revised low estimate contingent resource for the field is 40 million barrels within the AC/P23 permit yielding a pre-tax net present value of A$380 million at a discount rate of 10% --The high estimate contingent resource for the field is 71 million barrels within the AC/P23 permit yielding a pre-tax net present value A$1,100 million at a discount rate of 10% --Two gas recycle cases have been considered and costed based on the recently completed FEED studies, namely
- 600 million cubic feet per day recycled (for the low and best estimate contingent resource cases), and;
- 900 million cubic feet per day recycled (for the high estimate contingent resource case).
These cases yield liquids rates of 19,000 barrels per day and 29,000 barrels per day, respectively.
The resource estimates for the field exclude any resources from either the Plover sandstone encountered in Crux-2 or the potential extension of Crux into the recently awarded AC/P41 permit.
These results support Nexus' appraisal strategy of drilling one additional well later this year. It is then intended to progress to a financial investment decision ("FID") in early 2008. Maintaining this schedule will enable first liquids production in early 2010.
The company is confident that at least the low case resource estimate of 40mmbbl can be achieved in the core of the field surrounding the Crux-1 well, where there is good seismic continuity.
It is expected that the drilling of additional wells in the South East Crux Extension and the Sextans field extension will be drilled post FID. Additional volumes from these extensions would increase the value of the development but are not considered to be critical for the FID. Lower recoveries have been assumed for these extensions on the basis the gas may not be recycled rather reinjected into the core of the field.
Liquids resource estimates have been boosted by a higher than expected condensate content in the gas obtained from six down hole samples recovered and analyzed from the Crux-2 well. The average condensate ratio is 30% higher than previously estimated from the drill stem tests conducted on Crux-1 well. These new samples recovered provide a more reliable estimate of condensate gas ratio than were determined previously from surface sampling at Crux-1, however only a 10% increase has been used in Nexus' analysis.
Clearly significant liquids resource upside exists which the company expects to incorporate into its volume estimates after further down hole gas sampling from the Crux-2 Side Track-1 well.
The best estimate (most likely) resource case results in a unit capital cost of US$16 per barrel, an operating cost of US$3.60 per barrel during plateau production and a net present value (10%) pre-tax per barrel of US$10 per barrel (at US$52 per barrel Real 2007 oil price).
Nexus Managing Director, Ian Tchacos said, "These results illustrate the potential of the Crux liquids project. Nexus is confident that a substantial liquids resource exists at Crux and will continue to aggressively pursue this valuable project in order to bring it to development within 12 months."
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