NXS 1.93% $1.27 next science limited

announcements on the way, n/c, page-5

  1. 1,530 Posts.
    re: announcement out.. progress http://www.pesa.com.au/publications/pesa_news/nov_04/pesanews_7309.html

    Nexus Embarks On A Six Well Drilling Campaign
    Nexus Energy Limited has a full slate of drilling activity scheduled until mid 2005, recently kicking off with the drilling of the Longtom-2 well in the Gippsland Basin VIC/P54 permit, with farmin partner Apache Energy Limited.

    The Ocean Patriot drilling rig is being used for this and will be drilling in the basin for at least the first half of next year, according to Nexus Exploration Manager Philip Smith. He said the rig should still be in the Gippsland Basin after the drilling of wells in VIC/P54, in which Nexus has a 37.5% stake, “…when we’ll be in a position to drill our other prospects.”



    “There’s a series of options on the rig after that so with success and increased activity, the rig could be around for a long period of time. There’s a firm schedule on the Ocean Patriot in both the Gippsland and Otway basins until mid 2005, and then quite a few companies have options on the rig which are yet to be exercised.”

    The Longtom-2 well is being drilled to further evaluate gas sands encountered in the Longtom-1 and Longtom ST-1 wells drilled by BHP Petroleum in 1995, and to test the potential for deeper reservoirs. Based on recent work, Nexus believes the field has the potential to contain mean gas reserves of 270 Bcf with an upside potential of more than 500 Bcf.


    Including the Longtom-2 well, up to five wells are scheduled to be drilled by Nexus in the Gippsland Basin by the end of next year together with another well in exploration permit NT/P66 situated in the Northern Territory’s offshore Bonaparte Basin.

    As part of the Apache farmin deal, the large American independent company was given a one month option period to also farm into VIC/P56, which is situated in the highly prospective Central Deep area. Although this has now lapsed, discussions are continuing between Apache and Nexus.

    “We’ve just recently been awarded block VIC/P49, which was originally held by Canadian company Encana, and we’ve negotiated a deal with them whereby we take over responsibility for the permit in exchange for a small royalty”, Smith said.

    Both the VIC/P56 and VIC/P49 permits are now being offered as a single package to potential farmin partners, which the company believes should make them more attractive, combined with their large reserves potential and relatively low work commitments.

    “Two of the leads that we’ve identified in VIC/P56, Culverin and Scimitar, extend into VIC/P49, so now, having been awarded this block, we have access to all of both prospects and we’ve decided to market them to the farmin market as a single opportunity”, Smith said. “There’s also additional prospectivity in VIC/P49, which is a huge permit – it’s more than twice the size of the other three that we already had, although a lot of the permit lies in deep water to the southeast. It gets to well over 2,000 m in the southern sector. It’s relatively under-explored and quite a different petroleum system, so in that sector we’re currently looking at the available seismic data. But in the northern part, it’s quite similar to the petroleum system in VIC/P56.”

    “The Scorpion prospect straddles the boundary of the block to the north, and there’s also some other leads in that area, so we’re currently looking at the possibility of acquiring seismic data in that area. If we do, it could be a 3D survey. There’s quite a lot of 3D activity in the Gippsland Basin and a boat will be available in the next two to three months, so it could be a good time to take advantage of this.

    “In VIC/P56, we have three prospects that we want to drill. Two are Top Latrobe prospects: Haddock and Culverin. The third is a deeper prospect called Scimitar, which directly underlies Culverin. One of the attractions of those two prospects is that they could be drilled from the same surface location, so we could test two prospects with one deep well. We expect this to be a fairly conventional exploration well, either drilled as a single vertical well to test the structures at both levels… or a vertical well with a slight deviation - but we’ve yet to finalise a drilling location.”

    Smith said Nexus’ portfolio in the Gippsland Basin was attractive because it contained a range of independent leads and prospects, the majority of which are defined by new vintage 3D seismic. “We’re in a basin with proven source rocks for oil and gas, and if you look at Longtom and Grayling, for example, they’re probably about seven or eight kilometres apart, but they are testing completely different petroleum systems and different reservoir targets, so the result of Longtom does not impact on the results at Grayling – they’re independent tests and that is true of the majority of prospects that we have in our portfolio”, he said.

    Smith said the company had thoroughly evaluated both onshore and offshore opportunities around Australia before deciding to buy into the Gippsland Basin.

    “If you look at it from a statistical perspective, 95% of all hydrocarbons that have been found in Australia have been found offshore, and yet only 25% of all exploration wells have been drilled offshore. Therefore, the maturity of the exploration offshore is much less. Historically, it’s much more expensive to drill offshore than onshore and that is what has driven the juniors to explore onshore – they can’t afford to drill offshore. And that was the big step that Nexus made: despite the additional cost, we were going to explore where we believe there are bigger reserves to chase and a higher chance of success.”

    “The majority of companies our size are drilling onshore, such as in the Cooper and Surat basins, but there are now a few juniors that have got into the offshore Gippsland. Certainly, getting Apache involved has given people a bit more confidence.”

    “If you look at exploration history in the Gippsland, it’s quite interesting because, given the level of success, there is an anomalously low number of exploration wells. It was one of the things that gave us confidence there was still potential there. We were attracted to VIC/P54 and VIC/P56 as they had modern 3D seismic data already acquired over them.

    “Esso and BHP had acquired a regional survey over the northern part of the Gippsland Basin and we were able to get access to that data through data trades. To acquire that data would have cost us A$8-10 million and, in the end, we got it essentially for free. It was a bit of a one-off as it’s unusual for companies to acquire 3D data over other companies’ acreage. It was just easier for them to do it that way.”


    Bonaparte Basin
    Smith said the company quickly recognised the potential for gas in its wholly owned NT/P66 block, awarded to them in June 2003, situated in the southern part of the Bonaparte Basin, the Petrel Sub Basin. “The block is immediately adjacent to the Woodside block that holds Blacktip, so we were attracted.”

    “With the progress made with Blacktip, infrastructure is likely to be brought into the basin and that changes the economic value of the gas. So, whereas existing gas discoveries have been of little value, that now has the potential to change.”


    “Many in the industry wrongly believe there isn’t a market for gas in the NT. However, this is not in fact the case – the lack of availability of reasonably priced gas is preventing many greenfields projects which would be ideally located in Darwin. It is also becoming a concern because current supplies from central Australia run out in about 2009. Hence the motivation was both commercial and technical for Nexus to go into this area.

    “NT/P66 was unexplored both in terms of seismic coverage and wells. Bougainville-1 was the only well, and had been drilled over 30 years ago. We have recently acquired an airborne gravity survey using BHP Falcon technology, which is one of the few times it has been used for this sort of exploration work.

    The structures in that part of the world are generated by movement of deeper salt. There are a lot of salt diapirs and a lot of salt structuring. Salt is very low density… and the presence of salt affects the earth’s gravitational field, so we were hoping to be able to identify where salt had moved to from the gravity survey and then use that information to focus our 2D seismic acquisition.”

    “That’s in fact what we’ve done: We completed a 3,300 km 2D survey in October. The data is being processed by Veritas in Singapore and we expect the results to be available in February of next year. We will combine the results of the seismic data and the gravity survey into a joint data set. That will give us a much better idea as to what is actually being shown up on the gravity survey.”

    “We have a commitment to drill a well by June 2005. We are looking to farmdown our interest before this and hope to achieve a farmout in early 2005.”


    Forward Planning
    Nexus is reviewing recently gazetted permits for future potential growth areas, but has its plate pretty full at the moment with what they have in the Gippsland. “There were no new blocks gazetted in the Gippsland this time around so if we want more acreage, we have to look elsewhere.”

    “Much of the way we go forward depends on the outcome of this current drilling campaign, and the results of the Longtom and Grayling wells.

    “It’s a critical second phase. We’ll know those results in the next two months.”







    Good to see NXS is in good company in their fund


    http://www.firststate.co.uk/pdf/factsheets/GR.pdf

    10 largest holdings
    Stock name % of fund
    BHP Billiton 8.4
    Alumina 5.8
    Anglo American 5.0
    Rio Tinto 4.8
    Alcan 4.6
    CVRD 4.3
    Nexus Energy 3.8
    Barrick Gold 3.7
    GRD 2.7
    Petro-Canada 2.3
 
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