Nexus places Crux project on short-term hold

Nexus Energy, operator of the proposed Crux field liquids-gas recycling project in the Browse basin off W. Australia, has put the project in temporary hold following failed attempts to sell down its interest.

March 18, 2009

2 min read

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Mar. 18 -- Nexus Energy Ltd, Melbourne, operator of the proposed Crux field liquids-gas recycling project in the Browse basin off Western Australia, has put the project in temporary abeyance following failed attempts to sell down its interest in the development. The sales process has been managed by Deutsche Bank.

Nexus is now aiming to minimizing future capital expenditures until market conditions improve. Nevertheless the company adds that it hopes negotiations over asset sales, debt raising alternatives, and contractual obligations will be completed by the end of March.

Nexus says attempts to sell a stake in Crux have not resulted in an acceptable offer and, although it will continue to consider offers, the sale will not be actively marketed. It owns 85%, with Osaka Gas owning 15%. Nexus has been trying to sell as much as 30% of the project since the Japanese firm Mitsui walked away from a purchase deal in October 2008. Mitsui had planned to buy a 25% interest for $255 million, but global financial problems interfered.

Crux has an estimated 75.2 million bbl of condensate.

Other prospects
Currently it is negotiating to secure funding for the drilling of the Auriga prospect, which has estimated potential reserves of 42 million bbl of liquids within tie-back range of Crux field.

Drilling on Auriga is expected to begin in late May. A success would greatly enhance the economics of the Crux project.

In the same Browse basin region, Nexus is preparing to farm out a stake in its Echuca Shoals field in permit WA-377-P. A successful farmout could result in a well's being drilled later this year to test the full potential of the field, which holds possibilities for an LNG-scale development.

Elsewhere, the company is pushing ahead with its Longtom gas development in Bass Strait and expects to bring the field on stream to fulfill its supply contract with Santos through the Patricia-Baleen production plant on Victoria's east Gippsland coast by mid-2009.

Nexus says its key priority is finding funding solutions, while ensuring that Longtom achieves a cash-flow positive position as soon as possible.