Senex Energy Limited (ASX: SXY) announced on 17th April 2019 that the company agreed upon a domestic gas sales agreement for up to 3.25 petajoules of natural gas with CSR Limited (ASX: CSR). The sales agreement received by the company marked the first domestic gas contract from the company’s Atlas natural gas development project, and as per the company, it will support the local manufactures and create jobs in the domestic market.
CSR, a SE Queensland manufacturer, will use the natural gas in its 3 manufacturing plants in Queensland that produce PGH™ bricks, along with Bradford™ insulation, and Gyprock™ plasterboard. Currently, the plants of CSR employ 260 people at Oxley, Cooper Plains and Brendale.
Under the terms of the initial three-year sales agreement, the company will supply 0.65 petajoules of gas a year and total 1.95 petajoules to CSR Building Products Limited, which is a wholly owned subsidiary of CSR Limited. The sales agreement will commence on 1st January 2020, and the further terms of the agreement allow the CSR Limited to extend the agreement by two years, which will take the total sales of the company to 3.25 petajoules.
Senex will supply the natural gas at a fixed price in line with current market levels at the Wallumbilla Gas Hub in Queensland. The fixed price will be indexed annually, which will keep the sale prices in line with the market trend and price.
The MD and CEO, Ian Davies, mentioned that the company was glad to support the local jobs and local manufacturers along with domestic investment. Mr Davis also touched upon the marketing strategy of the company in his comments and mentioned that the focus of the company is to partner with domestic commercial and industrial customers directly for long-term, which will endure symbiotic relationship.
As per the company, the sales agreement implements the Queensland’s Government policies.
Mr Davis also mentioned that the sales agreement with CSR Limited is among, one of the feathers in the cap of the company, and many milestones are yet to come as Senex delivers its east coast gas development projects.
Senex previously announced on ASX that the company would start its Surat Basin drilling program in June 2019 after the company contacted Easternwell, an experienced oil and gas service provider.
As per the company, the contract signified the company’s consistency in the delivery of project milestones. Senex mentioned that it received all required approvals from state and federal regulatory authorities for both the project sites.
The first sales of gas from project Atlas is due late in 2019, and the company partnered with Jemena, to develop the project Atlas gas processing facility and associated pipelines. The company also mentioned that the civil works are in progress at the project site.
In Roma North project, the company completed the construction of the gas processing facility.
The shares of the company closed the day’s trade at A$0.360 (as on 17th April), up by 1.408% as compared to its previous close. Further, the shares of CSR closed the day’s trade at A$3.420 (as on 17th April), marginally down by 0.292% as compared to its previous close.
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