Key Points
Longtom-2 is set to commence early November
...

Key Points

Longtom-2 is set to commence early November

Grayling-1 oil exploration well could add >$1.40/sh if successful

Recently acquired a fourth Gippsland permit

NXS is fully funded for FY’05 work program ($9m cash)

Huge leverage to outstanding exploration program
Comments

NXS are set to spud the first of two wells in the offshore Gippsland Basin in early November. NXS will retain 37.5% of its VIC/P54
offshore permit in return for Apache assuming operatorship and funding 94% the wells for a 62.5% interest.

The first well, the Longtom-2 appraisal well could be worth ~35cps (fully diluted) to NXS if the estimated P50 recoverable gas
reserves of 251 bcf are present. The high case P10 reserves of 481 bcf would value NXS at >65cps if achieved.

The Longtom gas field was discovered by BHP in 1995 but was considered sub-commercial (70-120 bcf) at the time due to the lack
of maturity of the gas markets and the interpreted reservoir quality. A 386m gas column was intersected in the Emperor Formation in
Longtom-1 and ST1 and no gas-water contact was intersected due to drilling problems encountered - suggesting deeper reservoir
potential exists.

The 104 mmbbl Grayling oil exploration prospect will be the second well drilled following Longtom-2. Grayling is a well defined 3D
structure analogous to the large Turrum field 7km to the south with a main reservoir objective in the Intra-Latrobe Formation.
Conservatively, every 10mmbbls of recoverable oil discovered by the VIC/P54 JV will equate to ~14cps to NXS.

NXS has recently acquired a 100% interest in the VIC/P49 permit in the Gippsland Basin. Located adjacent to VIC/P56 (NXS 100%)
the permit is another example of the successful permit acquisition strategy for NXS. We anticipate NXS may farmout both permits as
one package to facilitate the drilling of the large dual target prospects Culverin and Scimitar which border both permits. Apache
remain a leading candidate to farmin.

Ahead of schedule due to logistics, a 2D seismic survey has been acquired over NXS’s wholly owned NT/P66 permit. It is likely NXS
will farmout to a major before drilling commences (probably in the Dec H’05). We view this permit as a sleeper given its proximity to
WPL’s Blacktip gas discovery and investors almost complete focus on its Gippsland acreage.

NXS has an outstanding acreage position in the Gippsland Basin, second only to the Esso/BHP JV. We continue to believe this will
provide NXS with a solid platform to build a substantial oil company beyond the upcoming two wells.