The move comes after Nexus said late last month it was evaluating the impact of the two wells on oil reserves at Basker but it still believed a merger was in the interests of both companies.

In January Nexus and Anzon had announced plans for a merger, which valued Anzon at about $648 million or $1.75 per share, and comprised $0.71 in cash and $A1.04 in scrip for each Anzon share.

However in the last few weeks, media reports and industry rumour have suggested the terms of the deal would have to be substantially revised as the field was not looking as good as previously expected.

Anzon's original Basker-6 appraisal well had failed to find a southeast extension of the Basker field after intersecting its objectives about 40m low to prognosis and below the hydrocarbon-water contacts, leading to suggestions that reserves at the field might be downgraded by as much as 40%.

While the subsequent sidetrack did encounter what appeared to be a southeast extension of the field, questions still remain about the two wells' cumulative impact on reserves at the field, and the two companies have been unable to agree on this question.

Ironically, in 2006, when Anzon was seeking to acquire Nexus via a hostile takeover, Anzon's then executive chairman Steve Koroknay repeatedly emphasised the certainty of Anzon's petroleum reserves and the speculative nature and potential downside of Nexus's contingent resources.

But since then, Nexus has announced several upgrades to reserves at its Crux condensate field, while Anzon has delivered an unpleasant surprise in the form of Basker 6 and 6ST1.

Nexus said it would now focus on the ongoing development of the Longtom gas and condensate field, bringing the Crux liquids project to a final investment decision, and pursue its exploration drilling program including the upcoming Libra-1 well adjacent to Crux.

This morning, Anzon said it began production testing at Basker-6ST1 on the weekend.

"Tests were conducted individually over each of the separately isolated zones: the shallower new pool discovery sand 2872m and the field-wide intra-Latrobe sand zone," Anzon said.

"No free water was detected, only the completion brine during clean-up. Zone 2 and 7 (commingled) will be tested next. The well will then be suspended in readiness for tie-back to the Crystal Ocean production facilities in July.

"It is anticipated that given the lower than expected gas-to-oil rations that this excellent well will add significant oil rate to the facilities."