Couldn't help but smile at the probability graph, 98% sure that it's 200BCF, 15% sure that it's 800BCF ...
Warm regards!
: )
I hold NXS.
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Shareholder Update Shareholder Update “Drilling Results and Other Asset Activities Drilling Results and Other Asset Activities” NT/P66 100% Interest June 2003 VIC/P54 37.5% Interest April 2003 VIC/P56 100% Interest August 2003 VIC/P39(v) 100% Interest April 2004 VIC/P49 100% Interest October 2004 16 December 2004 Prepared by Prepared by Ian Tchacos Ian Tchacos Managing Director Managing Director Shareholder Update Shareholder Update It has been a period of intense activity for the Company with the discovery of an additional gas column at Longtom, operations scheduled to occur at Grayling during the holiday season and a number of critical milestones converging upon the Company in relation to our other exploration ventures. The Company is operationally active and growing rapidly – in this environment the Company felt that it was appropriate to provide a brief update on our activities and our initial assessment of results from the Longtom #2 well. Ian Tchacos Managing Director Longtom #2: Drilling Results Longtom #2: Drilling Results �� A substantial gas bearing interval has been intersected in the Longtom #2 well and this interval that has yielded significant gas flow rates in DST#1. �� The attached analysis is the result of technical work undertaken by Nexus and its consultants based on data available from the Longtom #2 well. �� It is important to recognise that Longtom #2 is an exploration well encountering gas in a reservoir interval which has not previously yielded commercial production in the Gippsland Basin. �� While Nexus is encouraged by the results to date, additional geotechnical and engineering work is required to estimate the following: • The number of gas-bearing intervals • The position of the GWC or GWCs • The flow potential of each gas-bearing interval before the full potential of Longtom can be determined Longtom #2: Schematic of Intersected Sands Longtom #2: Schematic of Intersected Sands Emperor Fm gas Gas sand volcanics Strzelecki Fm Strzelecki Fm Longtom 2 Longtom 1 Test#1 intervals 2184.0 - 2192.5 mdbrt 2212.5 – 2243.5 mdbrt Test#1 intervals 2184.0 - 2192.5 mdbrt 2212.5 – 2243.5 mdbrt Test#2 intervals 2027.0 - 2029.5 mdbrt 2033.0 – 2036.5 mdbrt 2041.5 – 2044.5 mdbrt 2112.5 – 2121.0 mdbrt 2124.5 – 2142.5 mdbrt Test#2 intervals 2027.0 - 2029.5 mdbrt 2033.0 – 2036.5 mdbrt 2041.5 – 2044.5 mdbrt 2112.5 – 2121.0 mdbrt 2124.5 – 2142.5 mdbrt Longtom #2: Initial Interpretation from Well Logs Longtom #2: Initial Interpretation from Well Logs �� Of the 265m of Admiral Fm intersected, 96m of gas bearing sand was interpreted with porosities of greater than 10%. 39m of this sand was perforated in Test 1 (lower zone) and 34m in Test 2 (upper zone). �� In addition to gas, the sands must also possess sufficient permeability to allow gas to flow into the wells at commercial rates. An indication of permeability is given by the separation in the well log resistivity profile �� separation observed in resistivity logs indicates that water from the mud has been able to penetrate into the formation (&, by analogy, gas should be able to flow out of it) �� resistivity profiles in the sands indicate that the upper zone had comparable reservoir quality to the interval covered by lower zone and was expected to flow at similar rates. Longtom #2: Potential formation damage mechanisms Longtom #2: Potential formation damage mechanisms �� The sands in the Longtom reservoir have a material volume of clay particles mixed in with them and such sands are characterised by lower permeabilities �� Low permeability can be easily damaged during the drilling process �� Eg: water or fine particles in the mud can invade the formation and effectively block the gas from migrating to the well-bore after perforation �� It is possible that, while drilling, the pressure differential between the mud and the gas in the reservoir in the upper zone was potentially twice that for the lower zone �� thus the upper zone was potentially too damaged to flow gas �� in contrast, the lower zone perforations were able to extend beyond the damaged region and allow a good gas flow rate to be recorded �� Following the lack of flow in the 2nd flow test (upper zone), the Joint Venture decided to side track the well and to cut a core of the upper zone reservoir rock to establish whether formation damage has occurred or alternatively these sandstones are impermeable Longtom #2: Summary of flow test results ( Longtom #2: Summary of flow test results (Nexus Analysis) Nexus Analysis) �� Test 1: During Test 1 the lower zone sands flowed at 18-19 MMscf/d with 55b/d condensate at a flowing tubing head pressure of~965psi. • gas quality: low CO2 (1%) and low H2S (~.5 parts per million). �� Test 2: The upper zone sands appear on logs to have had comparable reservoir quality to interval covered by lower zone. Test 2 failed to flow hydrocarbons to surface. This may be as a result of formation damage or rocks being too tight to flow. Longtom #2: Side Track 1 Coring Objectives Longtom #2: Side Track 1 Coring Objectives �� The coring program of the upper sands will enable analysis of the reservoir quality in the absence of flow data from test #2 �� the results will be expected in ~3 months. �� Detailed analysis of this core should provide a better understanding of: �� the reservoir make-up �� permeability �� net pay �� potential formation damage mechanisms (allowing better drilling design) Longtom #2: Depth Map of Lower Zone Sands Longtom #2: Depth Map of Lower Zone Sands East VIC/P54 38 08 00 S 38 07 00 S 38 06 00 S 610000M E 612000MLongtom #2: Resource Potential Longtom #2: Resource Potential Nexus calculated resource potential post drill Nexus calculated resource potential post drill – Lower Zone Sands Lower Zone Sands Note: There is a large range in the resource potential currently estimated for Longtom as should be expected in the exploration phase of a previously unappraised reservoir. It is important to emphasise that the Emperor Sub-group has not been produced prior to this well hence uncertainty exists in relation to its lateral continuity and productivity. The GIP range above is based on a GWC at 2700m, which is 450m beneath the deepest gas sandstone seen in Longtom #2. This GWC is inferred from the pressures measured in DST#1 and assumes these gas sandstones are in pressure communication with the regional aquifer derived from nearby wells. This GWC extends beyond currently mapped structural closure and as such needs to be verified by further geotechnical work. Forecast: Longtom Gas in Place (GIP) 0 20 40 60 80 100 0.00 200.00 400.00 600.00 800.00 1000.00 1200.00 GIP (BCF) Probability that GIP is greater than indicated resource (%) Longtom #2: Conceptual Reservoir Simulation Studies Longtom #2: Conceptual Reservoir Simulation Studies �� Given the potential for a large gas resource in relatively poor reservoir Nexus has undertaken conceptual reservoir simulation studies to predict the flow potential based on the lower sand characteristics derived from preliminary analysis of Test 1 and the well logs. �� Based on a laterally extensive reservoir with similar qualities to that observed at Longtom #2 test 1 and which is in communication with the regional aquifer, the analysis indicates the accumulation is possibly capable of flowing at commercial rates utilising up to 3 horizontal wells. Longtom #2: Conclusions Longtom #2: Conclusions Nexus Analysis Nexus Analysis �� A large resource potential exists at Longtom on the basis of the sands intersected below 2175m in Longtom#2 �� The sands encountered in Longtom #2 above 2175m could add to this potential if permeabilities obtained from an upper sand core are positive �� Key risks remain including: 1. Defining the Longtom Gas in Place �� Extent and quality of the sands away from the Longtom #2 well �� The Gas Water Contact level in the Lower sands �� The reservoir pressure and gas water contact in the upper sands 2. Productivity of the Sandstones in the Admiral Fm �� The connectivity of the sands throughout the Longtom structure �� The ability to reliably drill and complete production wells such that productivity similar to that observed in Test 1 at Longtom #2 is achieved �� Further appraisal will be required to confirm the resource potential of Longtom Summary of Near Term Activity Summary of Near Term Activity Comment VIC/P54 Drilling Operations • Longtom Drilling • Grayling Drilling Timing includes testing if successful VIC/P56 & VIC/P49 • Farmout • Secure Rig Slots Goal to drill well #1 in Q3 05 NT/P66 • Seismic Processing & Mapping • Farmout • Secure Rig Slot Goal to drill well #1 in Q3 05 VIC/P39(v) • Seismic Acquisition & Processing • Mapping & Farmout Preparation Goal to drill well #1 in Q4 05 New Ventures • Production & Development Acquisitions Ongoing effort Dec Jan Feb March VIC/P56 and VIC/P49 Farmout VIC/P56 and VIC/P49 Farmout �� Farmout discussions commence this week with large oil and gas companies represented locally. �� IndigoPool (a Schlumberger company) will be used to market the opportunity internationally via their electronic data distribution network. �� Detailed mapping has further upgraded the potential of the Culverin and Scimitar prospects. �� Reserve Potential �� Discussions have commenced with rig owners to obtain up to two drilling slots. Mean Reserves (Million Barrels) �� Culverin (Top Latrobe) 100 �� Scimitar (Golden Beach) 65 �� Haddock (Top Latrobe) 18 Other Asset Activities Other Asset Activities VIC/P39(v) Seismic Acquisition and Mapping VIC/P39(v) Seismic Acquisition and Mapping �� Environmental impact assessments have been concluded for seismic acquisition. �� A 250 km seismic program is scheduled to commence in mid January 05 to mature the Galloway (30 million barrels) and Angus (25 million barrels) leads. Other Asset Activities Other Asset Activities �� Engineering work is ongoing to determine feasibility of drilling deviated wells from an onshore location with a view to decreasing costs and reducing the potential time taken to achieve commercial production in the event of a discovery. Other Asset Activities Other Asset Activities �� Processing of the large 3300 km Fog Bay 2D seismic survey acquired in October 04 is due to be completed in January 05. A fast track portion over existing leads will be available for mapping in early January 05. �� Farmout discussions expected to commence in mid January 05. �� Substantial interest has been shown from companies active in the area and potential new players in this gas prone province. �� A gas market report prepared for Nexus outlining a strong potential appetite for reasonably priced gas will accompany the farmout. NT/P66 Seismic Process, Mapping & Farmout NT/P66 Seismic Process, Mapping & Farmout Other Asset Activities Other Asset Activities �� Work is ongoing on several production and reserves development opportunities which compliment the Company’s appraisal and development portfolio. �� Nexus is currently high grading new areas for future exploration activity in line with its strategy of early entry and farmout utilising its technical skills and knowledge to gain industry funding and minimise equity contribution from its shareholders. New Ventures New Ventures Ongoing Operational Reporting Ongoing Operational Reporting The Company will continue to report on operational progress during its drilling campaign on Tuesday and Friday during the Christmas and New Year period. Well results such as hydrocarbon shows, log interpretation and test results will be provided. “The Board and Management of Nexus wish our shareholders a happy Christmas and prosperous New Year”
NXS Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
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