Nexus, Shell in talks on Echuca Shoals appraisal

Offshore staff

MELBOURNE, Australia -- An agreement in principal was signed between Nexus Energy Ltd. and Shell Develoment (Australia) Pty. Ltd. to jointly appraise the Echuca Shoals gas discovery off Western Australia.

If the agreement is completed, Shell would pay $20 million for 13.6% interst in the permit and fund $30 million toward an appraisal well, Echuca Shoals 2, to be drilled in early 2007, and thereby earn another 20/4% interest.

Nexus said, based on initial discovery well data, that the area might contain sufficient reserves to warrant a future LNG project, but that additional drilling is required to determine the true potential.

10/27/06