At APPEA a couple of weeks ago, Nexus put on a presentation on Longtom and described the volume in place as a 3C contingent resource. Having a contract in place to sell gas does not ensure commerciality or change the assignment from 3C contingent resources to 2P reserves.
What has changed since then? They have agreed to terms to sell Santos 350 PJ of gas. This is a contracted gas volume NOT a 2P reserve number. In fact, if you read their announcement, they are hoping to book ACTUAL reserves in the first quarter of 2008, so it remains a contingent resource.
Santos has no liability or equity position in this play no matter how much the wording sounds like they are going to take an equity position. At the end of the day, Santos needs the gas and if it is there great. If it isn't no big deal to Santos.
I am not saying there is or isn't substantial 2P reserves in Longtom, but I will say they are very clever at wording their announcements.
If it was so excellent why would Apache not have come back in...............makes you wonder!!!
NXS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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