Rick Wilkinson
OGJ Correspondent
MELBOURNE, May 29 -- AED Oil Ltd. has acquired 50% interest in Nexus Energy Ltd.'s Longtom gas field development project in the Gippsland basin off Victoria for $155 million (Aus.).
The agreement between the two Melbourne firms covers the entire Vic/P54 exploration permit and is conditional on AED securing debt financing for the majority of the payment. AED will pay Nexus an initial deposit of $35 million from its cash reserves.
The field lies on production license Vic/L29 about 30 km offshore in 56 m of water. Development comprises two subsea wells to be tied into a Nexus-built pipeline that will feed into the existing Santos-operated Patricia-Baleen field pipeline about 19 km away. Gas will continue on to the Santos onshore processing plant on the Gippsland coast near Orbost.
The move will add to AED's oil production from the Puffin field in the Timor Sea.
Longtom has proved and probable reserves of 350 petajoules of gas and 4 million bbl of condensate. It is expected to come on stream in July.
Gas from the field was sold to Santos under a long-term agreement, which contracts up to 25 petajoules/year. Condensate will be sold separately at prevailing market prices.
AED says the deal will generate more than $30 million a year in earnings before interest, tax, depreciation, and amortization.
Nexus says the deal provides the funding it required to endure an extended market downturn and eliminate any pressure to sell further interest in its Crux liquids project, now on hold in the Browse basin off Western Australia.
