Good posts Elliot and Tui. I agree with both of you, if that is possible considering your view points.
I do agree about the amount of drilling, or lack of (although until SXY explains in detail what they are counting as drilling, i.e, does the 30 wells include the wells to be drilling in the SXY/ORG J/V, as that could add 4-6 wells depending on how quickly they get the seismic done in FY2015).
SXY tenements surround the centre of the basin, and why this has enabled them to acquire much of the acreage cheaply, the negative of that however, is that fields will be far away from infrastructure, which in turns means that SXY is quite reliant on trucking for its oil (which in turns means a possible limit of total volumes). Even if it finds new fields, trucking will be the only solution in the medium term, except for any fields found near existing Growler/Snatcher etc in the Western Flank (and even then, the current pipelines do not have large capacity, or excess capacity for that matter).
That all being said, I think DLS has successfully shown that partnering to get more wells drilled does allow for a company to dilute its acreage, but actually enhance its returns... Surely there must be some local or, more likely international companies that would be very interested in partnering SXY for some of its conventional acreage..?
SXY is likely going to farm down Hornet in the near(ish) future which will likely provide a catalyst for reduced capex, but increased work programs. I think I am sitting on the middle of the see-saw to be honest.
Just to put things in perspective, I think BPT is actually going to have a fairly quiet year drilling wise, so SXYs 30+ wells may end up looking fairly decent... I suppose it depends on the targets.
2 weeks until we find out.
Lastly, SXY has a huge amount of acreage in the North Eastern part of the Basin in Queensland, they never talk about it at all. Why not farm it out. Its been sitting and doing nothing for years??
SXY Price at posting:
64.5¢ Sentiment: Hold Disclosure: Held
