Sundance Q1 Update; Prepares To Operate In A Low Oil Price Environment

  • May 17, 2019 AEST
  • Team Kalkine
Sundance Q1 Update; Prepares To Operate In A Low Oil Price Environment

Sundance Energy Australia Limited (ASX: SEA), an Australia-based oil and natural gas explorer, developer, and producer released its first-quarter earnings on 17th May 2019.

The company met the sales volume guidance for the first quarter, and the sales volume for the company averaged around 12,302 barrels of oil equivalent (Boe) a day for the quarter ended 31st March 2019, while the guidance of the daily sales volume was in the range from 11,500 to 15,500 barrels of oil equivalent a day. The average sales marked a rise from the level of 6,580 barrels of oil equivalent in the same corresponding period in 2018, to the level of 12,302 Boe, up by 87 percent.

Cumulative sales for the quarter stood at 1,107,222 barrels of oil equivalent, up by 87%, as compared to the cumulative sales of 592,158 Boe in 2018. The sales volume of the quarter consisted of 722,396 barrels of oil, up by 98% as compared to the net oil sales volume of 365,241 oil barrels in the same corresponding period in 2018.

Natural gas liquids (ng liquids) sales volume inched up by 117% and stood at 172,736 barrels in the quarter ended March 2019, as compared to just 79,513 barrels sales volume in the previous corresponding period (Q1FY18).

Natural gas sales volume stood at 1,272,546 thousand cubic feet Mcf, up by 44% as compared to its 884,423 Mcf in the previous corresponding period.

The company has # announced its FY18 earnings.

The prices realized by the company during the quarter ended 31st March 2019 are as follows:

Source: Company’s Report

The operational activities of the company from year to date are summarized, and are as follows:

Source: Company’s Report

The company hedge book is building strong, and it hedged 1,905,000 barrels with a floor price of $61.09 and a ceiling price of $67.74 for the year 2019.

Source: Company’s Report

Sundance secured 2,088,000 thousand cubic feet of natural gas with a floor of $2.86 and a ceiling of $3.13.

Source: Company’s Report

The crude oil hedge book is as follows:

Source: Company’s Report

A strong hedge book could safeguard the company’s revenue against the market fluctuation; however, it marked a relatively strong expense as compared to other expenses during the quarter ended 31st March 2019.

Source: Company’s Report

Second quarter and Full-year guidance:

The company estimates that the average sales could reach the level of 13,500 to 14,000 barrels of oil equivalent a day during the second quarter, with an EBITDAX of US$35 to 40 million.

Sundance plans to bring 25 wells online during the year with a cost of US$135 to $155 million, and the company further intend to spud 8 total wells during the second quarter with 6 being productional.

SEA mentioned that the base price, which it intends to keep is $50 (conservative oil price environment) and any higher cash recognized amid an increase in the market price of the commodity would be utilized by the company to pay the debt or for investment activities.

On 16 May 2019, the company notified that its bank group had completed its scheduled borrowing base reassessment.

The scheduled reassessment of the borrowing base determination led towards a joint approval for a significant borrowing base increase and reduction in pricing. As per the company, the determination of spring 2019 borrowing base inched up the borrowing base availability by 39%, which stood at US$170.0 million, up as compared to the previous assessment of US$125.5 million.

Sundance decreased the Credit Facility’s pricing by 25 basis points along with the expansion in company’s bank syndicate by two additional members. The total bank syndicate of the company now stands at seven, including the newly added two members.

The company mentioned it removed the reserves associated with the Dimmit asset from the calculation of the borrowing base, as an effect of which, the company’s borrowing base would not change upon the sale of the Dimmit asset.

Price Actions:

The shares of the company moved in a downtrend from the level of A$0.505 (Day’s high on 24th April 2019) to the level of A$0.375 (Day’s low on 14th May 2019). The share prices of the company moved upwards after hitting the level of A$0.375 and is now making continuous uptick from the past two trading session.

The shares of the company were trading at A$0.420 (as on 17th May AEST 02:45 PM).


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