SMH articleNexus farms out Crux to ShellAAPNexus Energy has...

SMH article

Nexus farms out Crux to Shell
AAP

Nexus Energy has rejected suggestions it had given up equity and control of its Crux liquefied natural gas (LNG) field, which petroleum giant Royal Dutch Shell has acquired for no cash cost.

Nexus on Tuesday said it had handed over ownership of 80 per cent of its Crux field in Western Australia to Shell, which will now develop and operate the project.

The gas will be piped to Shell's massive Prelude floating liquefied natural gas platform in WA's Browse Basin, which is the first of its kind and one of the largest floating structures in the world.

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Shell will own the 80 per cent in a `farm-out' arrangement by Nexus, which will own 17 per cent, and Japan's Osaka gas will hold three per cent under the non-binding heads of agreement.

Shell paid nothing in the deal but Nexus has a 12-month option to sell two per cent of its equity in the new JV to Shell for $75 million.

Nexus chairman Michael Fowler said he emphatically rejected the suggestion the company had "given up" equity and control of the asset, with Shell to become operators, saying the company had considered fully disposing of Crux.

Nexus has endured a troubled period since Crux was put on hold early in 2009, after Japan's Mitsui pulled out of a proposed deal the year before to buy a 25 per cent interest, sending Nexus's debts soaring.

Former managing director Richard Cottee quit suddenly late last year, before publicly criticising the board and attempting - but failing - to oust Mr Fowler and deputy chairman Michael Arnett at the company's annual general meeting

"This is strategic, high value and a great deal for Nexus," Mr Fowler told reporters.

"From a company perspective, the holy grail is ... participating in LNG."

"By virtue of the fact that Shell is lining up to buy two per cent that $75 million number provides certainty of development at Crux."

Production will not begin until after 2020, when Nexus will be exposed to LNG sales from Prelude in proportion to its equity interest.

Nexus will continue exploring for more potential gas reserves in the Crux area.

Nexus shares will begin trading at 24 cents on Friday after having been placed in a trading halt this week.

The company's shares halved in value and sunk to a low of 12 cents after Mr Cottee's resignation last September.