Nexus Energy Acquires Gippsland Basin Permit
Nexus Energy Limited has entered into an agreement with Liberty Petroleum Corporation to acquire a 100% working interest in a new 630sq km exploration permit awarded to Liberty in the Gippsland Basin offshore Australia. The permit will be known as VIC/P54 and has been granted for a period of six years pursuant to bids submitted in October 2002. In return Nexus have granted Liberty an over riding royalty interest of:
- 3% for the first 50 million barrels of oil equivalent production, and;
- 4% for production in excess of 50 million barrels of oil equivalent production.
A 3-D seismic survey has already been acquired in 2002 over approximately half of the block by Esso the operator of adjacent retention lease VIC/RL4. This data will be available to Nexus during the course of its primary (three year) work program and will assist the company to better define existing leads in the permit into drillable prospects and potentially define further leads.
Nexus was strongly attracted to this permit for the following reasons:
- An existing gas discovery at Longtom #1.
- The proven prospectivity and a variety of play types, with several leads already identified
- The availability of 3-D seismic which will become available to Nexus free of charge during the primary (three year) term.
- Proximity to existing infrastructure as well as relatively shallow drill depths (700 - 2700 meters and water depths (36 – 60 meters) which would enhance the economics of any discoveries
- The permit is relatively unexplored with only two wells having been drilled to date.
Work over the next two years will focus the potential viability of Longtom and the utilization of 3D seismic data to mature prospects in the permit area for drilling in the third year of the permit work program. Several leads in the permit have already been identified on the existing 2-D seismic data coverage, Nexus believes that with the application of new technology through the utilization of 3D seismic data further new structures will be delineated for drilling. Several leads in the permit have already been identified on the existing 2-D seismic data coverage, Nexus believes that with the application of new technology through the utilization of 3D seismic data further new structures will be delineated for drilling.
In excess of 4 billion barrels of oil/condensate and 12 TCF gas reserves have been discovered in the basin since exploration drilling began in 1964. There have been 50 discoveries made from 136 exploration wells in the basin to give a success rate of 36%. This high level of exploration success has not been reflected in recent exploration activity with only 12 exploration wells having been drilled in the last 10 years. Exploration in the basin has not benefited from 3-D seismic which has recently led to increased finding rates in other basins such as the Carnarvon Basin.
For such a prolific basin, the Gippsland Basin is relatively unexplored and Nexus believes there is still considerable potential for significant discoveries in this acreage and future gazettals. Securing 100% of the VIC/P54 permit represents significant progress in Nexus’ strategy of securing high quality exploration opportunities in prospective areas proximal to developed infrastructure and markets. The high equity level which Nexus holds in the block provides the opportunity for the company to gain leverage from its technical and commercial skills by attracting joint venture participants via a farmin or as part of an Exploration Joint Venture Fund across a broader portfolio of exploration assets. Nexus is continuing to focus on the Gippsland Basin as a core area of exploration portfolio development.