SXY (ASX) Ann: December 2019 Quarterly Report

Originally posted by majushal ↑

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.

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From the call it appears there are still 50+ wells to drill and at approx $1.3m capex per well that is going to eat into the liquidity very quickly. So I can see where you are coming from regarding a CR however any CR would not be in the very near future.

The analysts were not bullish about east coast gas prices. APLNG have been pumping a heap more gas into the dom market.

Sounds like they finished the oil drilling program in December and as such we are now subject to natural field decline for quite some time as there is no oil drilling planned. The Westeros campaign is exploration and will be quite a while away.

Pleasingly it sounds like Atlas is going well.

No real mention or talking up of Gemba was disappointing. I had hoped that field would be a game changer or fourth pillar for Senex given our acreage and the success other Cooper gas players have had..

The POO dropping another 2% overnight won't help matters.

Long term play but may be in for some short term pain.