take over is close!!!

3rd Analyst in the last week recommended a strong buy for this stock.

Good Luck All

Wire: Hartleys Limited Australia (HRT) Date: 2009-01-28 05:49:02
NXS - Quarterly Indicates Corporate Offers

Quarterly Indicates Corporate Offers
Nexus Energy Limited (“NXS”, “Nexus”, “Company”) has reported in its Q408
quarterly that the divestment process for its 85% owned Crux liquids project has
been expanded to include potential corporate offers. It is possible that this is
posturing in an attempt to improve the share price; however, we believe that
current market conditions are highly conducive to a takeover of the Company.
Potential bidders include joint venture partner, Royal Dutch Shell (“Shell”),
Mitsui E&P Ltd (“Mitsui”) or one of the Asian national oil companies, such as
Sinopec or Petronas. Shell is partnered with Nexus in two permits, AC/P41 (NXS
15%), where a ~500 billion cubic feet gas discovery was recently made, and
WA-377-P (NXS 66%), which contains the 2 trillion cubic feet Echuca Shoals gas
discovery. Both permits are located in the Browse Basin offshore in north
Western Australia. Mitsui recently farmed in to AC/P41 after walking away from a
deal associated with Crux.

Longtom on Track for First Gas Mid 2009
Nexus has also reported that its 100% owned Longtom Gas project in the Gippsland
Basin, offshore Victoria, is on track for first gas production in mid 2009. The
project is on budget and funding to complete the development is in place.
Longtom revenues are 80% fixed due to contracted gas sales, and our valuation of
A$293m, or 39cps, is insensitive to movements in oil price. Longtom should
provide net cash flow of ~A$60m for its first few years of operation.
Break Up Value of Assets vs Debt / Commitments

Nexus currently has cash of A$75m, debt of A$240m and estimated expenditure for
CY2009 of A$340m, with A$105m funded by undrawn finance secured against Longtom.
This leaves a shortfall of A$160m in 2H2009, which necessitates the need for a
farmout or sale of assets (or of the Company itself). Further expenditure of up
to US$600m is required for Crux.

We value Nexus’ share of Crux at A$1,500m, Longtom at A$293m and we estimate its
exploration assets are worth A$650m on a risked basis, with upside potential of
A$8b. This gives a total asset valuation of $2.4b compared to an enterprise
value (market capitalisation plus net debt) of $432m, indicating a large
discrepancy between our valuation (which we consider closer to what industry
would pay) and the market’s valuation.

Investment Thesis
Nexus has 2P reserves of 128 million barrels of oil equivalent (“boe”) and its
enterprise value to 2P reserve ratio is $3.40 per boe, which we consider very
low on a peer comparison basis of ~$14 per boe. Concerns over funding have
resulted in the stock being oversold, in our opinion, and gains in excess of
100% may be achieved through an asset sale or corporate transaction in the near
term.