Nexus revises Shell's Browse basin farmin

Jan. 18, 2007
Nexus Energy Ltd. of Melbourne has revised a major farmout deal with Shell Development Australia for joint appraisal of its Echuca Shoals gas-condensate discovery in the Browse basin off Western Australia.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Jan. 18 -- Nexus Energy Ltd. of Melbourne has revised a major farmout deal with Shell Development Australia for joint appraisal of its Echuca Shoals gas-condensate discovery in the Browse basin off Western Australia.

The new terms specify that Shell will earn as much as 34% interest in the WA-377-P permit by spending $55 million to drill two appraisal wells on the prospect.

Shell's participation will occur in several tranches, including funding of the first $30 million for the Echuca Shoals-2 well to be drilled in April. Diamond Offshore's Ocean Epoch semisubmersible currently is beginning a 12-well program on Shell's nearby 100% permit (WA-371-P), and Shell will bring it across for the Echuca Shoals appraisal work (OGJ, July 10, 2006, p. 28). Shell will then have the right to fund the first $25 million of a second appraisal on the field to retain a 34% interest in the permit.

Nexus said the new arrangement provides an opportunity to make more-rapid progress in the field appraisal and on into development if the program is successful.

Nexus will retain operatorship throughout the program.

The previous agreement, signed in October 2006, was for Shell to pay Nexus $20 million in cash for a 13.6% stake and contribute $30 million to drill one well in return for an additional 20.4% of the permit.

Nexus says it also has the option for a further sell-down of its interest to fund any ongoing program, particularly a potential stake in any future LNG development.