Junior oil and gas explorer Senex Energy recorded lower financial loss in 2017 and increased capital expenditure significantly for the next fiscal year to focus on major growth projects.
For the full year ended 30 June, the Brisbane-based company posted loss of AU$22.7 million, a 32% improvement from the $33.2 million reported in FY16.
This was primarily driven by lower sales volume of 0.75 MMboe and lower oil price combined with higher exploration expense. Senex’s FY17 sales revenue totaled $43.6 million.
The firm has a planned capital investment program of $80-100 million for the 2018 financial year, up from $62.3 million, in addition, is looking to increase production to 0.75-0.9 MMboe.
Senex said output will primarily be generated from the Cooper basin western flank as well as the Vanessa gas field. Gas volumes from the Western Surat Gas project will ramp up throughout FY18 with material gas production expected in FY19.
“Our FY18 investment program is designed to deliver returns from the oil business and growth in our gas business while maintaining a strong balance sheet,” said CEO Ian Davies. “We expect to achieve a number of project milestones for the Western Surat Gas project during FY18, which will ultimately facilitate a final investment decision for the project.”
During FY17, Senex commenced production from the Glenora pilot at Western Surat, with the raw gas sold to the Gladstone liquefied natural gas plant in Queensland, Australia. Furthermore, the firm sanctioned its first major investment in the project, committing $50 million to a 30-well drilling campaign, which commenced in June 2017.
The firm expects to have the first of these wells online in Q1 FY18 and will complete the drilling program by end calendar year 2017. It will also undertake an expanded program of appraisal activity west of the Eos block during FY18, including securing environmental and regulatory approvals.
Running in parallel is Senex’s oil business in the Cooper basin which continues to generate free cash flow at current oil prices. In FY18, Senex plans to implement a capital investment program focused on a small number of western flank drilling targets with internal rates of return higher than 50%.
“The majority of our oil is produced from the prolific western flank of the [Cooper] basin, an area with solid economic credentials even in a low oil price environment. Our recent Birkhead oil discovery provides further evidence of the western flank’s potential, and we have confidently refocused our efforts and spend in pursuit of high-value opportunities in the region,” Davies said.
Senex's sales revenue for FY16 was $69.3 million, down from $115.9 million in FY15. Total full year production of 1.0 MMboe was 26% down on the previous year, reflecting natural field decline and a limited number of new wells brought online due to reduced capital investment.
Image: Ian Davies / Senex
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