takeover target as reported in business daily, page-2

Hope you dont mind burnett, but I thought the entire article is worth a post, so here goes to holders... not a holder myself, but temping considering...

January 23, 2009


Nexus Energy Ltd could become a takeover target after including "potential corporate offers" in the sell down of its majority stake in the Crux liquids project in the Browse Basin of Western Australia, analysts say.

The oil and gas explorer is trying to sell down its 85 per cent interest in the AC/P23 exploration permit, which contains the Crux project, to raise funds to meet the $A1 billion project cost.

Wilson HTM analyst John Young said Nexus would need to sell down a significant proportion of the project, perhaps to the 40 per cent level, to fund its share of the project cost.

"It is to provide them with additional funding so they can progress the remaining share of the project and also by farming down, they reduce the amount of capital they need to contribute to that project," Mr Young said.

"There is also the possibility of the company itself being acquired.

"They are looking at corporate activity as well, which could mean someone is taking an equity interest in Nexus or looking to acquire the whole of the company."

Mr Young said speculation varied regarding the size of the interest being farmed out.

"They are keen to retain operatorship but whether they can or not remains to be seen, but certainly that is their preference."

Nexus said on Friday that the results of its divestment process were expected "in the coming month".

"Indicative proposals being considered at both the asset and corporate level with due diligence underway," it said.

Mr Young said Nexus also has the option of a partial or full sale of its wholly owned Longtom gas project in the Gippsland Basin, offshore Victoria, to help fund the Crux project.

Nexus said onshore construction work at Longtom was underway, with the project on schedule and on budget for first gas in mid 2009.

As for Crux, it said the project was "ready for an investment decision once FPSO (floating production storage and offtake vessel) charter and financing are in place".

Nexus said in October that it hoped to sell a stake in the Crux project by the end of 2008 after Japanese group Mitsui pulled out of a planned $US255 million ($A389.93 million) purchase of a 25 per cent stake, citing the effect of the global financial crisis.

Shares in Nexus were up 1.5 cents, or 3.7 per cent, at 42 cents