article in the australian

Nexus Energy close to sell-off
PAUL GARVEY
THE AUSTRALIAN
FEBRUARY 13, 2014 12:00AM
SPECULATION is growing that Don Voelte-chaired oil and gas producer Nexus Energy is close to finalising a sales process that investors will be hoping could trigger a takeover for the Melbourne-based company.

Nexus has been running a sales process for months and has told the market it is considering the sale of assets or the entire company.

The key to an offer for Nexus is its interest in the Crux oil and gas field -- which is adjacent to the Prelude field, controlled by Anglo-Dutch giant Shell.

Prelude will be the first oil and gas field exploited through Shell's revolutionary floating liquefied natural gas project.

This has led to speculation it could be Shell itself that is considering a tilt at Nexus, in a move to consolidate its interests.

Nexus is trading at just 5.9c a share and a market cap of $78m, which makes any deal for Shell small change.

Nexus owns a 15 per cent interest in Crux, while Shell holds 82 per cent and Japan's Osaka Gas has 3 per cent.


Acquiring Nexus would make it easier for Shell to develop Crux and bring it into the broader Prelude project, ensuring it of sufficient gas resources and reserves to meet long-term sales agreements.

Another international oil and gas producer, ConocoPhillips, is believed to have taken a look at Nexus as it searches for additional resources to feed into its increasingly hungry Darwin LNG plant.

While Shell has been focused on selling off assets under its new chief executive, Ben van Beurden, the price tag for Nexus compares with the $12 billion-plus capital expenditure for Prelude FLNG project.

Shell recently sold its stake in the Wheatstone LNG project under construction in Western Australia, has been looking to sell off its Australian refining and petrol assets and scaled back its work on the proposed Arrow LNG project in Queensland.

Nexus has endured a turbulent history in recent years. With several development options for Crux falling over, it could ultimately be forced to strike a deal with a major.

The numerous false starts by Nexus have seen investors steadily abandon the story, with its share price drifting down steadily from more than 50c in 2010 to its recent lows of less than 6c.

Nexus managing director Lucio Della Martina declined to comment when contacted by The Australian late yesterday. A spokesman for Shell also declined to comment.

If Shell were to buy Nexus it would almost certainly move to sell its Longtom gas field in Bass Strait. Adelaide-based Santos has the sole offtake rights to gas from Longtom and would be the obvious buyer.