Nexus Energy Hands Crux Field Over to Shell

Nexus Energy (NXS) rejects the talks that it had given up control of its Crux liquefied natural gas (LNG) field after it handed 80 per cent of its ownership to petroleum giant Royal Dutch Shell for no cash cost last Tuesday. Shell, who is now in control to develop and operate the project, intends to pipe gas from Crux to a Prelude floating liquified natural gas vessel in Western Australia's Browse Basin.

Nexus Chairman Michael Fowler believes that handing the Crux project to Shell does not signify 'giving up' because the company had considered to fully dispose it. The company faced a trouble period as Crux was put on hold last 2009 after Japan's Mitsui pulled out on a deal to buy 25 per cent stake-- an event that brought Nexus to a lot of debts.

According to the farm-out agreement between Shell and Nexus, Shell will own 80 per cent, Nexus will own 17 per cent and Japan's Osaka gas will hold the remaining 3 per cent. Though Shell acquired the interest in Crux without paying anything, Nexus has a 12-month option to sell two per cent of its equity in the new JV to Shell for $75 million.

"This deal gives Nexus high leverage within the Australian exploration and production sector as we are the only mid-tier stock with planned production through Shell's Floating LNG project," said Fowler.

The production will start after 2020, when Nexus will be exposed to LNG sales from Prelude.

Nexus shares will start to trade at 24 cents on Friday after facing a trading halt this week.