share placement, page-8

market loved it, and some positive media today...

(the age)
Nexus seals Nordic deal for oil project
Barry Fitzgerald
July 11, 2007

NEXUS has struck a strategic alliance with Norway's billionaire Clauson family that will underpin the Melbourne group's planned $800 million development of the Crux condensate (light oil) project offshore Western Australia.

The alliance is to be cemented through a $93 million two-tranche placement at $1.35 a Nexus share to the Clauson family-owned Viking Shipping, giving Viking 15 per cent of Nexus and locking Nexus' backdoor to low-ball bids while it gets its development projects up.

Apart from the capital injection, a key feature of the deal is that Nexus secured an option with Viking subsidiary, Vanguard Oil and Gas International, to lease a floating production, storage and offload vessel for the development of the Crux field.

Early in 2006, Nexus sold the rights to the gas at Crux (excluding condensate) to Shell for $US40 million. That agreement allows Nexus to strip out condensate in a gas recycling operation until 2020, at which time Shell will assume ownership of the permit with its gas and remaining condensate.

Recent confirming drilling has allowed Nexus to upgrade its condensate resource estimate for Crux to 65 million barrels. That encouraged Nexus to push ahead with design work on a gas recycling facility for Crux, with 900million-cubic-feet of gas a day to produced through three production wells.

More than 32,500 barrels of condensate a day would be stripped from the gas before the gas is injected back into the reservoir. A development decision on Crux is expected early in 2008, with first condensate production possible in 2010.

Nexus managing director Ian Tchacos said the Viking deal strengthened Nexus' capital base and its access to critical skills.

EL & C Baillieu analyst Ivor Ries said the deal was a "highly accretive transaction as it removed financing risk and enabled the company to retain 100 per cent of a project with a potential $1 billion net present value".

He said the FPSO option deal effectively raised $700 million of the $800 million required to get Crux into production.

Mr Ries said he had increased the firm's 12-month price target for Nexus from $1.95 to $2.45 a share. He also disclosed he was a shareholder.

Nexus shares gained 8.5¢ to $1.32 in response to the alliance.

Nexus is also working towards first production from its Longtom gas project in Bass Strait.