Ann: Senex completes asset portfolio review, page-23

I've been reading further into this.

Attached are the pages in the Annual Report that I think are relevant.

In the announcement SXY state:
"Material production, cash flow and earnings to be delivered from Senex’s east coast gas business and western flank oil assets"
These are later defined as WSGP and Project Atlas.
Reading this it would seem highly improbable that the flow rates are bad, as if this were so, no financier would lend against the project and that first point couldn't hold.
SXY have explicitly stated that their core assets will see material production and cash flow. And if this were the case it would follow that anything else would be low priority.

It follows that SXY have found the assets that are not as lucrative as the ones they want to aggressively target, therefore rather than continue to deploy capital on these assets at a lower rate of return, they've decided to abandon, write them down and salvage.

If you refer to the pages I've attached, the Annual Report already references wells in the Cooper Basin that were abandoned. I believe it is this area that SXY has just declared non -core. We've obviously spent $80M in capitalised capex that SXY want to now remove from the balance sheet - maybe something to do with the upcoming debt covenant (perhaps it stipulates a threshold for NTA, or change in NTA - it woukd make sense to get this right prior to execution).

Senex is to prioritise allocation of capital as follows:
• Successful development of Senex’s suite of high quality east coast gas development projects, including Project Atlas, the Western Surat Gas Project and the Cooper Basin Vanessa gas field;

Given SXY have explicitly stated they want to prioritise capital for the WSGP, it would surely suggest that the well performance on their pilot wells indicate a viable project.

Upon reflection, I am now inclined to believe the flow rates for the wells are high enough to support a viable development campaign.

The annual report pages show the pages where SXY will look to divest some "non-core" assets.

So basically, today's announcement indicates we may salvage some capital, plus save on capital we would have otherwise have deployed on these non -core assets to use on the prioritised assets.

Thursday could be a very interesting day to be a SXY holder.