Sundance Energy Australia Limited (ASX: SEA) is involved in the operations of exploration, development, and production of oil and natural gas in the United States. The company is focused on creating shareholder value through the implementation of its advanced technical capabilities and regional expertise.
The company, on 31st May 2019, published its Presentation for Annual General Meeting FY19. According to the quarterly summary and full year guidance for 2019, the company plans to deliver production and EBITDA growth in 2019 by operating within the cash flow. During the period, the company met its first-quarter guidance target for both sales volumes and EBITDAX while beating guidance for cash operating costs.
Two out of the four anticipated IP wells were placed on production immediately after the quarter ended on 1st April 2019. The 1Q19 development capital expenditure was US$41.3 million, primarily driven by the company drilling faster than expected, incurring incremental capital costs of approximately $11 million, which will reduce the capital expenditures for 2H 2019.
The plan for delivering 2019 production and EBITDA growth by operating within the cash flow is formulated at a conservative oil price deck of $50/bbl. The company will utilise the incremental cash from any price improvement to pay down debt, return capital or for additional development activities as appropriate.
Summary (Source: Company Reports)
As per the company’s investment highlights, SEA has a high-quality asset base. It maintains a strong balance sheet with ample liquidity and rapid deleveraging. In the second quarter of 2019, approximately 39% increase to the borrowing base provided an increased liquidity cushion. The available short-term liquidity was $62.5 million as of 31 March 2019. The Debt-to-Expected 2019 EBITDAX multiple stands at 2.0x, with significant deleveraging in 2019 and no debt maturities until 4Q 2022.
2018 was a transformational year for the company, which was built on Pioneer acquisition and exceptional well results. It brought 23 wells online in 2018, the majority of which vastly outperformed type curve, along with a full year net production of 10,333 boe/d, which exceeded the top end of guidance range and a full year EBITDAX of $100.1 million met the guidance target.
The high-quality asset base enables growth even at lower oil prices. The company has 49,222 net acres primarily in the Eagle Ford’s Oil and Volatile Oil Window. Moreover, 424 undrilled Eagle Ford locations represent a drilling inventory of more than 17 years. The deep inventory of wells with full cycle breakeven costs of ~$30.00 per boe allows the company to deliver production and EBITDA growth under various oil price scenarios.
The stock of Sundance Energy Australia Limited is trading at $0.320, down 11.111% during the day’s trade with a market capitalisation of $248.21 million (AEST 1:14 PM, 3rd June 2019). The stock exhibited negative returns of 33.33%, 8.86% and 22.58% over the past six months, three months and one-month period, respectively. Its 52-week high price stands at $1.050, and 52-week low price stands at $0.290.
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