Listening to the quarterly conference call, the analysts questions concentrated on gas prices which have "collapsed" in the words of one analyst, and future flow rates from the CSG wells. MD/CFO implied that contracted prices were higher than spot although I got the impression that the analyst thought those higher prices may not last beyond 12 months. ID stated that flow rates from the CSG wells were difficult to predict with any certainty because of the nature of the beast, so may vary significantly quarter to quarter. If the analysts were assessing risks, this is what they were concentrating on in the conference call.
In addition Senex's credit facility is now fully drawn and while they have $120m in cash including proceeds of the asset sale and drawdown from the credit facility, any continued cash burn will increase the risk of a CR. CFO seemed very confident that next quarters numbers will be a lot better and will start to reflect the revenue from the current contracts.
What I can't get an handle on from the quarterly is the margins and profitability of gas production. Will have to wait for the half yearly in Feb which might shed some light on that.
I've got to admit it was nice to see some good numbers coming out of Senex at last and a significant uplift in gas production. The decline in oil production also halted in the quarter thanks to new wells offsetting other field decline. Hopefully that can continue.
SXY Price at posting:
33.8¢ Sentiment: Hold Disclosure: Held
