analyst coverage

Nexus - Second Life
Recommendation: Nexus holds
significant oil & gas development and
exploration assets which StockAnalysis
estimates to have a value of at least
$1.17 per share and up to $3 per share
in the high case. In the medium term,
StockAnalysis sees potential for the
company’s shares to appreciate
towards 75 cents and thus the stock is
recommended as a speculative buy.
Sale of a 50% interest in the Longtom gas project for $155 million considerably
reduces Nexus’ financial risk, but does not totally eliminate that risk.
An improving oil market underpins value estimates for the company’s 86%
held Crux project, which StockAnalysis estimates will require an oil price of
over US$42/bbl to break even. Modelling a 9 year project life, which delivers
production of 70.5 mmbbls of condensate between 2012 and the end of 2020
from an estimated 75 mmbbl resource, delivers a net present value of just over
$1 billion for the project at an average oil price of A$121/bbl (currently around
$88/bbl). StockAnalysis assumes an initial oil price of US$70/bbl, rising at 8%
pa thereafter, which it considers to be conservative.
Recent exploration success in the region lifts the potential for the Crux permit
to hold up to 150 mmbbls of recoverable condensate. Addition of 50 mmbbls to
the estimated 75 mmbbls of condensate at Crux, would improve the project’s
value to Nexus from an estimated $1.38 per share to $1.57 per share,
assuming that the company retains a 50% interest going forward.