Do you know what Senex Energy expects from Fiscal 2019?

Senex Energy Limited (ASX:SXY) today unveils how its production and capital expenditure in Fiscal 2019 are to look like. It told production is estimated to fall between 1.1 – 1.5 mmboe while capital expenditure is expected to range within $110 – 130 million for the Fiscal 2019.

But this is not the only update that Senex has provided today, it has also announced the Final Investment Decision following financial close of $150 million debt facility for its Surat Basin natural gas projects.

The statement reads that Senex has secured $150 million debt facility from Australia and New Zealand Banking Group (ANZ) for the seven-year tenure. The facility is a senior secured syndicated reserve-based lending (RBL) facility that will provide $125 million RBL limit and $25 million limit for three-year working capital.Â

Managing Director and CEO Ian Davies stated “The facility provides access to low-cost finance for development of Senex’s long-life oil and gas projects. The facility is also the first senior reserve-based lending facility for a natural gas project in Australia not backed by LNG.”

In the Final Investment Decision Senex approved multi-year work programs for Project Atlas and Roma North natural gas development programs. These projects aim to establish Senex as a material supplier of gas to the east coast market through achieving targeted increase in annual oil and gas production to 4 mmboe. However, by the end of FY21 Senex targets to achieve gas production run rate of ~3 mmboe per annum, including ~1 mmboe per annum from Roma North and ~2 mmboe per annum from Project Atlas.

Senex Managing Director and CEO Ian Davies stated that in the Surat Basin execution of the Project Atlas and Roma North natural gas development programs will continue, and in the Cooper Basin a 10-well exploration and development campaign is underway.

Looking at the statistics, approximately 110 development wells are reported to be drilled across Project Atlas and Roma North over 18-month starting from late Q3 FY19. This will possibly take Surat Basin’s total capital expenditure to be within the range of $220 – 250 million by FY21.

On total production front, Senex expects production growth trajectory to continue with material increases in both oil and gas volumes. Oil production is expected to jump from 0.75 mmboe in FY18 to the range of 0.8 – 1.0 mmboe in full year Fiscal 2019. The company expects higher production in FY19 due to full year contribution from Marauder discovery and the Growler horizontal well along with two recent commercial oil discoveries that are slated to be brought online in second quarter of FY19.

Further, ramp up of Roma North wells and full year contribution from Vanessa Field in the Cooper Basin is expected to yield gas production of 0.3 – 0.5 mmboe in FY19, up from 0.09 mmboe last year.

The range of capital expenditure of $110 – 130 million is calculated on the estimation of $85 – 105 million capex on Surat Basin program, up to $45 million on Cooper Basin program and up to $5 million on others, net of free carry.

The debt facility of $150 million is said to be repaid over remaining term post completion of Project Atlas and Roma North, however, there wouldn’t be any penalty if the company repays earlier. SXY last traded at $0.385 on 29 October 2018.

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