The deal includes a 50 per cent joint venture interest in the VIC/P54 exploration permit, which surrounds the Longtom project.
Completion of the transaction is subject to conditions, including AED obtaining debt financing for Longtom, a variety of approvals and Nexus completing construction of the project.
AED said that project construction was progressing well, with first gas and condensate production expected to start in July. The company said there was also potential to work with Nexus on other opportunities.
Under the deal, Nexus will be paid an initial secured deposit of $35 million followed by a further payment of $120 million on completion of the transaction, which is expected to occur in September.
AED said the transaction gave it product and geographical diversity.
"The addition of the Longtom project to AED's existing oil projects in the Timor Sea will diversify the company's asset base as well as providing further cash flow over the long term,'' AED executive chairman David Dix said.
"AED's 50 per cent interest in the project is forecast to be cashflow positive immediately after completion, generating in excess of $30 million of EBITDA per annum attributable to AED.''
The acquisition is to be funded primarily through debt funding, with the remainder to be funded by cash reserves.
Nexus shares are in a trading halt and last traded at 38 cents.
Nexus managing director Ian Tchacos told a teleconference that the company's shares would resume trading tomorrow.
Mr Tchacos said the deal would strengthen Nexus' balance sheet and "alleviates the need for cannibalizing our asset base'', avoiding the need for a "fire sale'' of its Crux liquids project offshore Western Australia.
AED shares were up two cents, or 2.17 per cent, at 95 cents at 12.11pm.
