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Nexus Energy to raise funds for Victorian venture
September 1, 2009 - 3:35PM
Nexus Energy says it will raise fresh equity to complete its Longtom gas development off the coast of Victoria.

Although the oil and gas producer and explorer on Tuesday did not specify the amount to be raised, it said that at June 30 the costs to complete Longtom were about $63 million, bringing the revised project cost to $315 million.

The capital raising will allow half the project to be sold to AED Oil Ltd once offshore installation work is completed.

Nexus shares went into a trading halt prior to the announcement on Tuesday.

The cost of building the Longtom facility rose after delays earlier in the year following a contractual dispute with a diving support vessel.

A new dive support vessel has since been enlisted to complete the offshore installation work.

Nexus in May flagged that it would sell 50 per cent of Longtom to AED Oil but the sale could not be finalised until the gas facility had been built.

A Nexus spokeswoman said the capital raising would allow the project to be finished so the sale to AED Oil could go ahead.

She said more details of the capital raising would be announced in coming days.

Completion of Longtom is now expected by October 15, with first gas sales soon after.

Hartleys energy analyst David Wall said he expected Nexus to seek $40 million to $80 million in the capital raising, partly through a share placement offer and partly through a rights issue.

''Ideally they wouldn't have had to do it, but it has become something that was necessary because of the delays and the cost-blowout at Longtom,'' Mr Wall said.

The Longtom gas field is estimated to contain 435 petajoules of gas and 5.2 million barrels of condensate.

Nexus also says it is seeing renewed interest in its 85 per cent-owned Crux liquids project off Western Australia.

In 2007 Nexus sold the rights to the gas, excluding condensate, at the Crux field to Shell, and sold a 15 per cent interest in the Crux liquids project to Osaka Gas for $75 million.

''Nexus continues to pursue options for a partial sell-down of Nexus' interest to assist in providing funding for the development of the liquids project with the introduction of a new partner,'' it said.

AAP