Nexus and Shell Finalize Echuca Shoals Farm-In
Nexus Energy has finalized farm-in and joint venture agreements with Shell for appraisal of the Echuca Shoals gas condensate discovery. Nexus has received a US $5 million cash payment from Shell, prior to the scheduled drilling of the Fossetmaker-1 well.
The Echuca Shoals field is located in the WA-377-P permit, in the Browse basin offshore Western Australia. WA-377-P is adjacent to the permit containing the large Ichthys gas condensate field, which is currently the focus of a proposed LNG development. Nexus will retain a 66% interest in the permit after the farm-in by Shell.
The Farm-in Agreement is now binding on the parties with the receipt of all regulatory approvals, the finalization of a joint operating agreement and the upfront payment of US $5 million by Shell to Nexus.
Under the farm-in agreement, Shell will also fund the first US $30 million of the Fossetmaker-1 well, the first well to be drilled on the structure, and has an option to fund the first US $25 million of a second appraisal well in order to earn a 34% interest in the entire permit.
Drilling on Fossetmaker-1, which will be located approximately 7 kilometers ENE of the Echuca Shoals-1 discovery well, is likely to commence late August early September 2007. The well will be drilled using the Shell contracted "Ocean Epoch" semisub. Nexus will remain the permit operator however Shell will be responsible for the drilling operations on Fossetmaker-1.
Nexus Managing Director Ian Tchacos commented "Settlement of this transaction finalizes our contractual framework with Shell in preparation for the joint appraisal of the Echuca Shoals gas condensate field. This is not just a matter of funding; it is an important partnership for Nexus in the event that the Fossetmaker-1 well is successful in defining a significant gas resource at Echuca Shoals. Shell is a recognized leader in our industry and has a successful record in developing, managing and marketing successful LNG developments."
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