Cottee's progressIT took Richard Cottee, one of our favourite...

Cottee's progress

IT took Richard Cottee, one of our favourite corporate eccentrics, a good three years to put Queensland Gas back on track early in the new century and it rather looks as if he is making much faster progress at his new junior realm, Nexus Energy.

Nexus was on life-support when Cottee arrived last year, what with the little gas company's funds pretty much gone, its only producing asset in trouble and its plans to build a $1.2 billion liquids project up there on the North West Shelf looking like serious fantasy.

Back then it looked very much as if Shell, Nexus's partner in a complicated arrangement that will see it eventually assume ownership of the Crux project and permit, held all the aces.

It looked then, as it does still, to be the natural owner of Nexus. But the odds seemed good that it would get the assets it wanted from the banks rather than from Cottee's shareholders.

Ten months on and Cottee has his Victorian gas flowing again, his debt problems resolved at least until 2012 and cash enough to see the Crux liquids projects through to a final investment decision. And all of that means that Cottee has reopened Nexus's options and given its owners a real chance to secure full value from the opportunity they have invested in. This has been a four-step process. Twice Cottee has convinced banks to extend him finance enough to replace term debt, then with that support he convinced Shell to extend the trigger date for the transfer of Crux from 2021 to 2023.

Nexus simply needs that extra time to make financial sense of its investment in Crux. That potential for improved return on investment metrics made it easier for Cottee to take that fourth and most important step, which he did on Monday, announcing a fully underwritten $122m three-for-10 renounceable rights issue.

That cash will see Cottee pay off the $70m of shorter debt taken on to keep his business running, invest $30m on drilling out its Victorian gas project, Longtom, and pump $20m into the Crux engineering and design study. Cottee's next step will be to start marketing a serious slice of his bit of the Crux project, though he reckons on retaining control if only to ensure that the endgame options remain his.

You'd have to bet that Shell still looms large among those options, which include the obvious (a takeover that expresses control premium) or a joint venture that would see Cottee's liquids project drawn into Shell's plans to deliver Crux gas to its Prelude LNG project.

"The hardest bit at QGC and Nexus was to accept that you are not in control," Cottee says. "But once you do, then you can start moving the chess pieces to the right squares so that control returns to your side of the board."