Nexus Receives A$75 Million for Crux Project from Osaka Gas
Nexus through its wholly owned subsidiary, Nexus Energy WA Pty Ltd, finalized a Sale and Purchase Agreement with Osaka Gas, which was executed on 1 August 2007.
Nexus and Osaka Gas will now initiate joint studies to identify and secure exploration opportunities, which will target significant potential gas resources.
Nexus is now aggressively pursuing the development of the Crux liquids project following the completion of front-end engineering studies and the drilling of the Crux-2 and Crux-2 ST1 appraisal wells.
Nexus and Osaka Gas have committed to a work program intended to progress the Crux liquids project to a financial investment decision ("FID") in the second quarter of 2008.
Immediate activities on the Crux liquid project include:
-Finalization of an independent engineering report, expected to be completed in October 2007, estimating the resources currently available for development for the Crux liquids project;
-Review of a leased FPSO option from Vanguard Oil and Gas International ("Vanguard") for the project pursuant to an FPSO option agreement where Vanguard, a subsidiary of Viking Shipping Limited, has agreed to provide Nexus with a leased FPSO on pre-agreed terms based on a transparent calculation of lease rates;
Detailed engineering targeting FID for the project during the second quarter of 2008;
-Purchase of long lead items prior to FID intended to maintain a schedule of first liquids production during the first half of 2010;
-Two appraisal / development wells expected to commence drilling in January 2008;
-An exploration well in the adjacent AC/P41 exploration permit expected to commence drilling in January 2008 (Nexus 50% interest), which is likely to have an impact on Crux potential resource volumes in both the AC/P41 and AC/P23 exploration permits; and
-Discussions with banks to secure project finance for the project prior to FID.
Osaka Gas is capitalized at a$9.1 billion and has been operating for over 100 years. The company is the seventh largest gas utility in the world (based on 2006 sales revenue) importing over 7 million tons of LNG per year. Osaka Gas owns and operates two LNG receiving terminals, a commercial and domestic gas distribution system and power generating assets in the Kansai region of Japan.
Nexus managing director, Ian Tchacos, said "We are very pleased to have finalized this transaction with Osaka Gas in an efficient and constructive manner. We are about to enter a very exciting period for the Crux liquids project and exploration focusing on Crux near-field potential. Osaka Gas brings considerable financial capacity to the project which places Nexus in a position to accelerate the progress of the Crux field development."
"Having laid the foundation for a strong partnership with a respected downstream industry player with extensive experience in the Asia Pacific LNG and gas markets, we now intend to pursue further opportunities which are expected to add value to both companies."
"Osaka Gas brings to Nexus additional financial support and marketing capability, enhancing our competitive standing in both the Australian oil and gas sector and the Asia Pacific LNG and gas market." Mr. Tchacos said.