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Australia's Nexus denies Shell takeover talk after share surge

https://www.chemnet.com   Aug 04,2010
Australian junior oil and gas producer and explorer Nexus Energy on
Tuesday denied reports of a potential A$480 million ($437 million) takeover
offer from global major Royal Dutch Shell that sent its share price soaring.


"Nexus advises that it has not been approached by any party nor is in
discussions with any parties in respect of a takeover of the company," Nexus
said in reply to queries from the Australian Securities Exchange after its
share price surged from A$0.31/share at the open to A$0.395/share when trading
was halted midmorning. They were trading at A$0.375/share when trading resumed
after the release of the announcement mid afternoon.


"The company is not aware of any other reason for the price and volume
change."


Earlier Tuesday, the Australian newspaper reported that several of Nexus
Energy's biggest shareholders "are said to have been sounded out about a $480
million takeover bid," which it said "fuelled speculation that Royal Dutch
Shell was preparing to make a move on the company," without citing sources.


The report said the shareholders had been offered A$0.50/share. Shell
declined comment.


In its quarterly report on Friday, Nexus said its priority for 2010 was
the commercialization of the Crux field in Production License AC/L9 in the
Browse Basin, offshore Western Australia.


Shell is planning to produce LNG from its proposed Prelude floating LNG
project in 2016, initially based on gas from its Prelude field, but later fed
by nearby fields including Crux.


Nexus is operator of AC/L9 and has an 85% interest in the liquids
resource in a joint venture with Osaka Gas (15%). Shell Development Australia
holds the rights to 100% of the gas resource within the permit and under the
current contract, can access the gas in 2021. Nexus's license requires it
start operations at Crux before February 23, 2014.


In its quarterly report, Nexus said "both sources of finance" for the
development required that Crux provide a bankable production return for ten
years, which would require the current December 31, 2020, handover date to
Shell be extended. This would "require negotiation," Nexus said in the report.


Shares in Nexus had traded as high as A$1.75/share in early 2008 before
Mitsui withdrew a $255 million offer for a 25% interest in Crux due to the
global financial crisis, Platts reported earlier.


Nexus' other key asset is its wholly owned Longtom gas project in the
Gippsland Basin, offshore southeastern Australia, which recorded its first
full quarter of production over January-March 2010 of 3.32 petajoules of gas
and 40,100 barrels of condensate. However production ceased April 23 and
remains shut-in after mercury was detected in delivered gas.
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