shell takeover 50c p/s - australian business?

Shell touted as likely suitor in Nexus takeover bid rumour Matt Chambers and Brett Clegg From: The Australian August 03, 2010 12:00AM Increase Text SizeDecrease Text SizePrintEmail Share
Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?NEXUS Energy shareholders are said to have been sounded out about a $480 million takeover bid.
This has fuelled speculation that Royal Dutch Shell is preparing to make a move on the company early in the tenure of former Queensland Gas Co boss Richard Cottee as managing director.

While the company is understood not to have direct knowledge of the approach, rumours are circling that several of Nexus's biggest shareholders have been approached about a 50c-a-share offer.

Yesterday, Nexus shares closed at 31c, down 1c, having risen more than 20 per cent in the past two weeks.

It is unclear who is behind the approach, or what it might lead to, but industry sources say the prime candidate is Shell, which has rights to the gas in Nexus's Crux field off the coast of Western Australia.

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Related CoverageTop banker joins Nexus board The Australian, 2 Sep 2009
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Capital raising to fund project: Nexus The Australian, 1 Sep 2009
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Both Shell and Nexus declined to comment.

It is understood one of the shareholders that has been sounded out is London-based.

Mr Cottee officially started with Nexus on July 22, but leading up to this had been heading efforts to revise strategies to develop the Crux project, of which Nexus owns 85 per cent of the liquids and condensate.

The company is under time pressure to extract the liquids. Not only does its production licence require operations start before February 2014, but under a 2006 agreement, Shell has rights to take the gas, and any remaining condensate, from the field from 2021.

Further complicating the situation, Nexus's quarterly report on Friday revealed that potential funders of the Crux development, including an Australian bank, are requiring an extension of the December 31, 2020, handover date be negotiated with Shell.

Shell wants to use the gas for its Prelude floating LNG project.

"Crux gas is an integral part of the Prelude FLNG project as a tieback option to the FLNG facility that will be located over the Prelude and Concerto gas fields," a Shell spokeswoman said yesterday.

If the liquids JV, which includes Osaka Gas, decides not proceed with the liquids project before 2021, it can have access to the liquids via a possible Shell-operated gas and liquids project, in which case the 2021 end date would not apply. Nexus has retained Deutsche Bank, which advised it on the Crux sale, as an adviser.