I think I was either mislead then or is it only just now?
Senex Energy
Transition to gas accelerates
SXY is in the process of raising ~A$95m in capital, from ■ a A$55m institutional
placement and up to a A$40m share purchase plan (SPP) to existing retail
shareholders.
■ The deal looks attractive to us, with large global energy firm EIG Global Energy
Partners (EIG) coming on as a strategic cornerstone investor at a premium.
■ Of critical importance, the funding supplies SXY with a large wedge of capital that
will allow it to accelerate the development of its flagship Western Surat Gas
Project (WSGP).
■ With WSGP having path-to-market and potential funding located, we have
changed our valuation methodology on the project to a risk-adjusted DCF basis.
■ We see value on offer in SXY, with potential upside beyond our revised A$0.48
price target (depending on the results at WSGP).
EIG deal a positive
This latest deal by SXY has seen sizable global energy player, EIG, enter the register as
a significant shareholder and potential future funding source (for both debt and equity) at
a premium to SXY’s last share price. SXY has indicated it will use its increased capital
resources (we estimate cash at ~$137m after the placement) to support an accelerated
development program at its flagship WSGP.
Valuation increased to A$0.48
A change in valuation methodology for WSGP and an increase in our risk weighting for
the project are the two primary drivers of our increase in SXY’s overall valuation to
A$0.48 (from A$0.31). Outlined in detail later in the report, we have built a conceptual
DCF model on WSGP that has been risk adjusted to include 25% of the unrisked value
we estimate for the project. The assumptions behind our DCF model are likely to evolve
as development gets underway and the number of data points increases.
SXY Price at posting:
$4.60 Sentiment: Hold Disclosure: Held
