Nexus Confirms Hydrocarbon-Bearing Sand at Longtom-4 Well

Nexus Energy Limited has advised that as at 6:00 am (AEST) the Longtom-4 development well in Production License VIC/L29 in the Gippsland Basin, offshore Victoria, was setting 10 3/4 inch casing after having had reached a depth of 2,600 meters measured depth below the rotary table (MDRT) in 13 1/2 inch hole at an inclination of 52 degrees.

Interpretation of intermediate wireline logging data has confirmed that, as was predicted, the well has intersected a single hydrocarbon bearing sand in the shallower section of the Longtom field. This sand will be production tested after drilling and completion of the horizontal section of the well.

After setting the 10 3/4 inch casing in the current hole section, the pilot hole will be drilled to intersect the deeper section of the Longtom field which is anticipated to contain the major portion of gas reserves in this part of the field. The horizontal section of the well will then be drilled to intersect lengthy intervals of the two deepest sands as shown on the cross section below.

Drilling and logging of the pilot hole will be followed by the drilling, completion and production testing of the horizontal section of the well. Longtom-4 is then planned to be suspended as a future gas producer, awaiting connection to the pipeline later this year.

Longtom-4 is being drilled by the West Triton jackup and is the second development well for the Longtom gas project. The Longtom-3 well, drilled during the third quarter of 2006, is ready for commercial production with no further rig intervention required. The flow capacity of Longtom-3 alone is expected to be sufficient to supply the anticipated maximum contract rate requirements for the Longtom field. Timing of a planned third development well will depend on the results of Longtom-4 and the field's production performance over time. The current plan assumes this well will be drilled two to three years after project start-up.

Gas produced from the Longtom wells will enter a new 12 inch pipeline and will be transported from the field to the end of Santos' existing Patricia-Baleen pipeline, 19 kilometers away. Nexus will construct this pipeline and the associated control lines and equipment. The raw gas will then continue along the Patricia-Baleen pipeline to shore where it will be processed at Santos' existing onshore gas plant. Santos will install new equipment at the plant capable of processing the Longtom gas. This will primarily involve facilities for the stripping of condensate from the gas and the subsequent stabilization, storage and export of the condensate.

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