Under the new terms, Shell will immediately earn up to a 34% interest in the WA-377-P discovery by spending $US55 million ($A70 million) drilling two appraisal wells and paying Nexus $5 million in cash.

The earlier agreement would have seen Shell pay Nexus $20 million in cash for a 13.6% stake and contribute $30 million to drill one well in return for an additional 20.4%.

Nexus managing director Ian Tchacos said his company, which will retain a 66% stake in the discovery, believed the Echuca gas resource could be large enough to support its own liquefied natural gas project.

“Shell is a global oil and gas industry leader with a long track record in developing and managing successful LNG projects and we look forward to further developing our relationship with them,” he said.

“We have the potential via this transaction to gain access to Shell rig slots, which provides the opportunity to make more rapid progress with the field’s appraisal and development in the event of success.”

If the Echuca appraisal work is successful, Tchacos said Nexus had the option to further sell down its interest to fund more appraisal or development work.

“Given our developing relationship with Shell, it is our preference to obtain funding from them to optimally position the joint venture for any future LNG development,” he said.

The Echuca Shoals-2 appraisal well is scheduled to be drilled during the second quarter of this year using a rig contracted by Shell.