ASX Announcement
Release Date: 11 March 2020
Senex delivers transformational growth through its Surat Basin investments
Senex Energy Limited (Senex, ASX:SXY) today announced its growth transformation is forecast to deliver a step-change in annual production, cashflow and earnings from successful delivery of its Surat Basin gas development projects.
Through its best-in-class project execution performance, Senex is successfully establishing a diversified and resilient cashflow profile, with a free cashflow breakeven Brent oil price of less than US$30/bbl.
Senex today, via its Investor Briefing, outlined further details regarding its transformation:
- Production is forecast to triple from FY19 levels to more than 3.6 mmboe in FY22, without growth capital expenditure.
- Annual EBITDA of $100-110 million and free cashflow of $70-90 million from FY22, the first full year of Surat Basin plateau production.
- Rapid de-leveraging of Senex's Balance Sheet, with peak net debt of less than $80 million in Q1 FY21, and Net Debt:EBITDA in FY22 of less than 0.5x.
- FY20 production guidance re-affirmed at 1.8-2.0 mmboe, with EBITDA guidance of $40-50 million.
- Surat Basin development capital expenditure savings due to production outperformance; well count reduced by more than 20% to 85 wells.
Speaking at the Company's Investor Briefing, Senex Managing Director and CEO Ian Davies said "The high- quality, low-cost nature of our Surat and Cooper Basin assets, together with our best-in-class execution capability, has enabled Senex to deliver a transformation in our business.
"Senex's robust Balance Sheet, proactive hedging strategy and approach to gas contracting provide Senex with resilient cashflows to support the execution and ramp-up of our Surat Basin gas development projects.
"Continued focus on free cashflow generation and enhancing shareholder value is evident in our Surat Basin development capital expenditure reductions, also announced today", Mr Davies said.
Roma North continues its strong performance and has now reached the plant's initial capacity milestone of 16 TJ/day, or around 6 PJ/year, more than 12 months ahead of schedule.
Based on outperformance of wells to date, Senex today announced it has completed its Roma North drilling campaign, with just 35 wells of the originally planned 50 wells required to reach initial plateau production.
Senex Energy Limited | Head Office | Phone +61 7 3335 9000 | |
ABN 50 008 942 827 | Level 30, 180 Ann Street, Brisbane Qld 4000 | Facsimile +61 7 3335 9999 | |
ASX: SXY | GPO Box 2233, Brisbane Qld 4001 | Web www.senexenergy.com.au | Page 1 of 2 |
At Atlas, Senex has reviewed the strong initial production performance of the initial 23 wells drilled and leveraged learnings from Roma North. This has resulted in a reduction to the number of wells required to reach initial plateau production from the originally planned 60 wells to 50 wells.
Further, Senex has reviewed its Atlas capital program and identified an opportunity to build, own and operate critical Atlas water treatment infrastructure, and remove ongoing water treatment tolls over the life of Atlas. This opportunity is value accretive to Senex, with investment of approximately $15 million materially reducing ongoing water treatment operating costs and increasing operational flexibility.
After the reduction of 25 wells and the inclusion of Atlas water treatment infrastructure, Senex expects net capital expenditure for its Surat Basin capital program to reduce by around $15 million, within original capital expenditure guidance.
Given outperformance at Roma North and long term gas offtake, as previously announced Senex has entered FEED on the low-cost 8 TJ/day expansion of the gas processing facility to 24 TJ/day, or around 9 PJ/year. Senex expects to finalise FEED in H2 FY20.
"This expansion project promises to be low-risk with fast cash returns given the modular processing facility design, more than 20 years of 2P reserves coverage at 24TJ/day, and ready land access and other approvals.
"Careful progression through FEED demonstrates both Senex's disciplined approach to capital investment and the low-riskhigh-return opportunities within our current portfolio", Mr Davies said.
Ends
The Investor Briefing will be streamed live via the following link:https://webcast.openbriefing.com/5932/
A copy of the Senex Energy Investor Briefing slide pack is attached.
Authorised by: | Investor enquiries: | |
Ian Davies | Derek Piper | Paul Larter |
Managing Director and CEO | Senior Advisor - Investor Relations | Communications Manager |
Senex Energy Ltd | Senex Energy Ltd | Senex Energy Ltd |
Phone: +61 7 3335 9000 | Phone: +61 7 3335 9000 | Phone: +61 400 776 937 |
About Senex
Senex is an ASX-listed, growing and independent Australian oil and gas company with a 30-year history. We manage a strategically positioned portfolio of onshore oil and gas assets in Queensland and South Australia, with access to Australia's east coast e nergy market. Senex is focused on creating sustainable value for shareholders by leveraging our capability as a low cost, efficient and safe explorer and producer.
Senex Energy Limited | Head Office | Phone +61 7 3335 9000 | |
ABN 50 008 942 827 | Level 30, 180 Ann Street, Brisbane Qld 4000 | Facsimile +61 7 3335 9999 | |
ASX: SXY | GPO Box 2233, Brisbane Qld 4001 | Web www.senexenergy.com.au | Page 2 of 2 |
Senex Energy Investor Briefing
11 March 2020
Senex Energy Investor Briefing | 11 March 2020 | 2 |
Agenda
Topic | Presenter | Title |
Senex transformation driving shareholder value | Ian Davies | Managing Director and Chief Executive Officer |
East coast gas market dynamics | Neil Sutherland | EGM Commercial and Corporate Affairs |
Financial strength and discipline | Mark McCabe | Chief Financial Officer |
Project delivery and operational excellence | Peter Mills | Chief Operating Officer |
Wrap-up | Ian Davies | Managing Director and Chief Executive Officer |
Q&A
Senex Energy Investor Briefing
Compliance Statement
Important information
This presentation has been prepared by Senex Energy Limited (Senex). It is current as at the date of this presentation. It contains information in a summary form and should be read in conjunction with Senex's other periodic and continuous disclosure announcements to the Australian Securities Exchange (ASX) available at: www.asx.com.au. Distribution of this presentation outside Australia may be restricted by law. Recipients of this document in a jurisdiction other than Australia should observe any restrictions in that jurisdiction. This presentation (or any part of it) may only be reproduced or published with Senex's prior written consent.
Opinions and forward looking statements
This presentation contains opinions and forward looking statements (such as guidance, projections, forecasts, targets, outlooks) and other material. Unless expressly stated as guidance, a statement given in this presentation is not guidance. Opinions and forward-looking statements in this presentation involve known and unknown risks, assumptions and uncertainties, many of which are beyond Senex's control. Details on the key underlying assumptions used in this presentation are set out on this page and for a summary of the key risks facing Senex refer to the 2019 Annual Report. As a result, while it is believed that the expectations reflected in the opinions and forward looking statements in this presentation are reasonable they may be affected by a variety of variables and changes in the underlying assumptions on the basis on which they are formed which could cause actual outcomes or results to differ materially from that stated or implied by the opinions or forward-looking statements. Accordingly, Senex cautions against placing undue weight on such opinions or forward-looking statements.
No investment advice
The information contained in this presentation does not take into account the investment objectives, financial situation or particular needs of any recipient and is not financial advice or financial product advice. Before making an investment decision, recipients of this presentation should consider their own needs and situation, satisfy themselves as to the accuracy of all information contained herein and, if necessary, seek independent professional advice.
Disclaimer
To the extent permitted by law, Senex, its directors, officers, employees, agents, advisers and any person named in this presentation:
- give no warranty, representation or guarantee as to the accuracy or likelihood of fulfilment of any assumptions upon which any part of this presentation is based or the accuracy, completeness or reliability of the information contained in this presentation;
- accept no responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation.
11 March 2020 | 3 |
Assumptions
Opinions, projections, forecasts, targets, and outlook statements given in this presentation are not guidance. As explained above, forward looking statements involve uncertainty and are subject to change. Opinions and forward looking statements in this presentation have been formed on the key concepts and
assumptions outlined below. They have not been subject to audit or review Senex's external auditors.
Foundation Asset Base
References throughout this presentation to Foundation Asset Base relate to full year FY22 performance from the following assets:
- Atlas gas assets; 32 TJ/day nameplate capacity;
- Roma North gas assets; 16 TJ/day nameplate capacity;
- Cooper Basin producing oil and gas assets; internal estimates of production.
The Foundation Asset Base does not include additional capital expenditure on exploration, appraisal, development or infrastructure, however does include maintenance capital expenditure for the Cooper Basin, and sustaining capital expenditure to maintain plateau production at Atlas and Roma North.
Financial metrics / assumptions
- US$65/bbl Brent oil price;
- A$:US$ exchange rate of 0.67;
- Atlas uncontracted gas price (ex-Wallumbilla) of $8.50/GJ;
- Atlas contracted gas price per existing gas sales agreements;
- Roma North oil-linked gas price per existing gas sales agreement;
- Unit operating costs are all-in, including field operating costs, tolls, tariffs and royalties;
- Various other economic and corporate assumptions.
Project-related assumptions
- Assumptions regarding drilling results;
- Expected future development, appraisal and exploration projects being delivered in accordance with their current project schedules.
Financial definitions
- EBITDA = Earnings before interest, tax, depreciation and amortisation
- FCF = Free cashflow = Operating cashflow less debt financing costs less sustaining capital expenditure
- FCF breakeven = The average annual oil price whereby cashflows from operating activities before tax equate to cashflows from investing activities less discretionary expenditure
- ND = Net debt = Total interest bearing liabilities less cash
- ND:EBITDA = Ratio of Net debt to EBITDA
Senex Energy Investor Briefing | 11 March 2020 | 4 |
Senex transformation driving shareholder value
Senex Energy Investor Briefing | 11 March 2020 | 5 |
Value proposition from Senex transformation
Cash generation from high-return portfolio and project execution excellence to drive shareholder returns
✓ |
Core focus on cash |
generation, shareholder |
returns and low-risk |
high-return growth |
✓ |
Full year production contribution in FY22, targeting1
- EBITDA $100-110m
- FCF $70-90m
- ND:EBITDA <0.5x
✓ |
Proven best-in-class low |
cost project execution |
and asset operating |
capabilities |
✓ |
Cash generation
supports
- Debt repayment
- Shareholder returns
- Disciplined growth
✓ |
Strong stable cashflows |
from Surat and Cooper |
Basins - proven |
hydrocarbon Basins |
✓Expansion and |
acceleration opportunities |
• Low-riskhigh-return |
opportunities within |
existing reserves and |
asset base |
✓ |
Resilient cashflows from |
low cost operations and |
fixed price gas |
contracts: |
FCF breakeven at |
<_us24_30 bbl="" brent="">1 |
✓Diversification |
and growth |
- Disciplined review of growth opportunities to build portfolio quality and scale
1. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 6 |
Senex Purpose, Mission and Values
What guides us
Our Purpose
Our Mission
A growing and independent company, providing oil and gas to improve lives and support the energy needs of Australia and the world.
- We protect our people and the environment
- We build quality relationships with our customers, partners and stakeholders
- We deliver what we promise
- We attract and retain talented people with drive and energy
- We create value for our investors
Our Values
Senex Energy Investor Briefing | 11 March 2020 | 7 |
Committed to people, environment and community
A strong focus on safety and sustainability across our operations and communities
People
Environment | Community | |
Improved safety outcomes and performance
- Continued improvement in safety performance
- Nil Long Term Injury frequency rate in H1 FY20
- Improving TRIFR of 5.4 in H1 FY20
- Continued focus on contractor management, incident reporting, behavioural safety and safety leadership
New environmental initiatives implemented
- Continued excellent environmental performance
-
Establishment of a 168ha environmental
offset program with local landowners, providing improved habitat for endangered species - Funding assistance for the Wild Desert conservation project
- Water supply to drought affected graziers through the Roma North irrigation scheme
Continuing support for our communities
- Ongoing commitment to employing local businesses, staff and contractors
-
Supporting initiatives within our communities:
Wandoan State School's Greener Ovals, Water4All and STEM workshops and Roma's ColourXplosion fun run - Continuing 24 hour availability of helicopter medical evacuations in the Cooper Basin
Senex Energy Investor Briefing | 11 March 2020 | 8 |
The Senex transformation
Proven best-in-class low cost execution and operating capabilities in proven hydrocarbon basins
Production growth
Asset and
Product
Diversification
FY17FY20
(Historical) | (Guidance) |
0.8 | 1.8 - 2.0 |
mmboe | mmboe |
19%
35% 44%
65%
100%
37%
100%
FY22
(Target)
3.6+
mmboe1
16% | Cooper Basin | |
14% | Roma North | |
56% | Atlas | |
28% | ||
86% | Oil production | |
Gas and gas liquids production
EBITDA | ($1.4m) | $40m - $50m | $100m - $110m |
NB. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
1. Represents Foundation Asset Base, which excludes capital expenditure on exploration, appraisal, development or infrastructure, however does include maintenance capital expenditure for the Cooper Basin, and sustaining capital expenditure to maintain plateau production at Atlas and Roma North
Senex Energy Investor Briefing | 11 March 2020 | 9 |
Senex executive and management
Experienced and dedicated leaders and staff
Executive role | Name | Commenced | Industry experience | Past experience |
Managing Director and | Ian Davies | 2010 | 20+ years | BG Group, QGC, Barclays Capital |
Chief Executive Officer | ||||
Chief Financial Officer | Mark McCabe | 2019 | 25+ years | APLNG, Origin Energy, PwC |
Chief Operating Officer | Peter Mills | 2018 | 35+ years | BHP, Hess, Woodside |
EGM Commercial | Neil Sutherland | 2019 | 30+ years | Total, BHP |
and Corporate Affairs | ||||
Executive General Manager | Suzanne Hockey | 2016 | 25+ years | Oil Search, Barrick |
People & Performance | ||||
Company Secretary and | David Pegg | 2013 | 30+ years | Ergon Energy, Blake Dawson |
General Counsel | ||||
Surat Basin Business Unit | Darren Stevenson | 2012 | 25+ years | Arrow Energy, AGL, APA |
Manager | ||||
Senex Energy Investor Briefing | 11 March 2020 | 10 |
Senex operating model
Framework for cashflow generation, shareholder returns and disciplined growth
Senex asset lifecycle
Senex asset portfolio discipline | Senex capital allocation discipline |
Oil and Gas
Production
Domestic Gas
Marketing
Reserves
Development
Exploration
- Asset portfolio within proven hydrocarbon basins
- Portfolio free cashflow breakeven <_us24_30 bbl="" brent="">1
- Strong balance sheet and low-risk debt profile: target ND:EBITDA <0.5x1
- Growing domestic customer base with long term fixed price gas contracts
- Proactive oil hedging program
- Debt repayment
- Returns to shareholders
- Low cost development of existing oil and gas reserves
- Near-fieldexploration opportunities
- Disciplined review of growth opportunities to build portfolio quality and scale
1. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 11 |
Developing Senex's oil and gas reserves
Low-risk,high-return organic growth options within existing asset portfolio
2P reserves (as at 30 June 2019)
Surat Basin 2P gas reserves
26
210
Surat Basin (as at 30 June 2019)
- Potential for material Atlas reserves growth through current and future work programs
612 PJ | 232 | |
144 | ||
Roma North developed | Roma North undeveloped | |
Atlas | Other Western Surat |
Senex Energy 2P reserves
7
111 mmboe
104
- Initial Roma North expansion project entered FEED (16TJ/day to 24TJ/day)
- Significant Roma North 2P reserves provide strong foundation for current and future expansion projects
- Favourable economics with long-term gas offtake
Cooper Basin (as at 30 June 2019)
- 4.3 mmbbl 2P undeveloped reserves with 7.3 mmbbl total 2P reserves (as at 30 June 2019)
- Low-risk,high-return development projects to bring oil to market over FY21 and FY22
Cooper Basin | Surat Basin | NB. For further information on Senex reserves, refer to ASX announcement dated 20 August 2019; Senex currently |
updates its reserves and resources position annually in conjunction with its full year financial results |
Senex Energy Investor Briefing | 11 March 2020 | 12 |
Delivering material and sustainable free cashflow
Targeting $70-90 million of annual free cashflow from FY22 from Foundation Asset Base
$ million | 100 - 110 | 20 - 30 | |||
110 | |||||
90 | 70 - 90 | ||||
70 | |||||
50 | 40 - 50 | ||||
30 | |||||
10 | (1.4) | ||||
(10) | FY17 | FY20 EBITDA | FY22 Target | FY22 Target | FY22 Target |
EBITDA | (Guidance) | EBITDA | Sustaining | Free Cashflow | |
Capex |
A highly cash generative Foundation Asset Base
- Material EBITDA and free cashflow generation from Foundation Asset Base
- Resilient free cashflow break even at <_us24_30 bbl="" brent="">
References to Foundation Asset Base relate to full year FY22 performance from the following assets:
- Atlas gas assets; 32 TJ/day nameplate capacity;
- Roma North gas assets; 16 TJ/day nameplate capacity;
- Cooper Basin producing oil and gas assets; internal estimates of production.
The Foundation Asset Base does not include additional capital expenditure on exploration, appraisal, development or infrastructure, however does include maintenance capital expenditure for the Cooper Basin, and sustaining capital expenditure to maintain plateau production at Atlas and Roma North
Sensitivities (all relate to full year FY22 analysis):
- Brent oil price: +/- US$10 Brent oil price = +/- A$13m free cashflow
- Atlas gas price (ex-Wallumbilla): +/- A$1 gas price = +/- A$6m free cashflow
- Australian dollar: +/- 1 cent AUD = -/+ A$1.4m free cashflow
NB. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions.
FY22 target key assumptions include: US$65 Brent oil, A$:US$ exchange rates of 0.67, Atlas uncontracted gas price of A$8.50/GJ; Atlas contracted gas price per existing gas sales agreements, Roma North oil linked gas price per existing gas sales agreement; unit operating costs are all-in, including field operating costs, tolls, tariffs and royalties.
Senex Energy Investor Briefing | 11 March 2020 | 13 |
Senex east coast gas assets the enabler
FY22 target production to triple vs FY19, with long term gas contracts providing strong, stable cashflows
Natural gas >75% of FY22 target production
mmboe | |||
4.0 | +200% | ||
2.0 | 3.6+ | ||
0.0 | 1.2 | ||
FY19 production | FY22 target production | ||
FY22 targeted production mix1 | |||
16% | |||
Cooper Basin | |||
Roma North | 3.6+ | ||
mmboe | |||
56% | |||
Atlas | 28% | ||
Strong margin generation through operational excellence and
rigorous cost control
- Proven ability to find innovative solutions for developing and producing oil and gas resources
- Low cost oil producer in the Cooper Basin with field operating costs of <_a24_10>
- Low operating costs in the Surat basin; FY22 full year targets:
- Unit operating costs <$3/GJ (all-inclusive)2
- Well availability >95%
- Well mean time between failure >24 months
- Maintenance drilling and stay in business capital expenditure of $20-30 million (Surat and Cooper basins)
- Represents Foundation Asset Base, which excludes capital expenditure on exploration, appraisal, development or infrastructure, however includes maintenance and sustaining capital expenditure; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
- Unit operating costs are all-in, including field operating costs, tolls, tariffs and royalties; royalties calculated using Foundation Asset Base definition and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 14 |
Disciplined approach to capital allocation
Maintaining financial strength for pursuit of sustainable growth in shareholder value
Balance Sheet and capital
management initiatives
- Maintain robust balance sheet at all times
- ND:EBITDA <0.5x1
- FCF breakeven <_us24_30>1
- Rapid de-leveraging
- Committed to commencing capital management initiatives from free cashflow
Expansion and acceleration | Review of diversification and | |||
opportunities | growth opportunities | |||
• Roma North expansion up to 50 TJ/day; | • Disciplined approach to review | |||
24 TJ/day first phase in FEED | of growth opportunities | |||
• Appraisal and development of broader | • Farm-ins / joint ventures / | |||
Western Surat acreage | acquisitions | |||
• | Production acceleration of Atlas | • Farm-outs / disposals | ||
2P reserves into market opportunity | • Strict focus on capability | |||
• | Gemba gas field appraisal | alignment and time to cashflow |
- Near field Cooper Basin exploration
1. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 15 |
East coast gas market dynamics
Senex Energy Investor Briefing | 11 March 2020 | 16 |
Strategic east coast gas portfolio
Gas acreage and processing facilities linked to key domestic markets
• Committed to delivering increased gas supply into the east coast market
• Diversified gas acreage in Queensland and South Australia
• Opportunities for expansion and growth to meet forecast supply-demand gap from 2024
• Infrastructure partnership with Jemena supports expansion and growth
Senex Energy Investor Briefing | 11 March 2020 | 17 |
Gas supply remains tight
Undeveloped gas reserves critical to future supply
Forecast east coast gas supply-demand fundamentals | Outlook tight for the medium term | |
• East coast gas market now linked to global LNG market
• Suppressed LNG spot pricing and increased supply from LNG producers to domestic market
• Longer term supply fundamentals however remain strong
• Rebound in LNG demand expected
• Residual uncertainty in indigenous supply
• Material investment needed to meet demand - development of undeveloped 2P and 2C resources
Senex Energy Investor Briefing | 11 March 2020 | 18 |
Limited spot price exposure in Senex gas portfolio
Atlas long term fixed price gas contracts signed and more under negotiation
Contract prices reflect term, risk and transportation
Source: ACCC Gas Inquiry 2017 - 2025 Interim Report, January 2020; gas prices offered by producers in Queensland for 2020 supply
Surat Basin gas volumes 95% contracted in calendar year 2020
100% | ||
38% | 40% | |
50% | 95% | |
62% | 60% | |
0% |
CY2020 | CY2021 | CY2022 | |
Surat Basin contracted gas | Surat Basin uncontracted gas | ||
- Atlas domestic gas sales to CleanCo, CSR and Orora commenced on schedule at fixed prices
- Atlas portfolio now comprises:
- Six customers for supply of 32 PJ1 at fixed prices
- Mix of firm supply and put arrangements
- Attractive pricing and terms
- Term contract negotiations for Atlas gas ongoing
- Working collaboratively to underwrite new developments and projects
1. Refer ASX announcement dated 23 January 2020
Senex Energy Investor Briefing | 11 March 2020 | 19 |
Financial strength and discipline
Senex Energy Investor Briefing | 11 March 2020 | 20 |
Strong financial position to deliver growth
Financial resilience in a low oil price environment with free cashflows growing rapidly
Peak net debt in | Resilient cashflow |
Q1 FY21 | breakeven |
<$80 million | <_us24_30> |
FY20 EBITDA guidance | FY22 EBITDA target |
$40-50 million | $100-110 million |
Proactive oil hedging
>500,000 bbl at A$90-95/bbl
FY22+ annual free cashflow target
$70-90 million
NB. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 21 |
Committed debt facility to deliver base business
Expecting peak net debt below $80 million in Q1 FY21
Senior secured reserves-based lending facility
Debt facility: | $125 million (fully drawn) |
Bank guarantee facilities: | $35 million |
Total borrowing facility: | $160 million |
Strong liquidity as at 31 December 2019
$ million | Cash reserves | Drawn debt | ||||||
150 | ||||||||
100 | ||||||||
50 | 122.7 | |||||||
- | ||||||||
(50) | (125.0) | |||||||
(100) | ||||||||
(150) | ||||||||
31-Dec-19 | ||||||||
- Surat Basin work programs funded through debt, cash reserves and partnership with Jemena
- Reserves-baseddebt funding secured, unique for a greenfield gas development
- Competitive pricing; supportive bank group
- Fully drawn for remaining Surat activities
- Standard covenants; no market capitalisation covenants
- No penalty for early repayment or refinance
Senex Energy Investor Briefing | 11 March 2020 | 22 |
Revenue protection during project execution
Proactive hedging has protected cashflows for delivery of Surat Basin gas development projects
H2 FY20 Production Mix
(January - June 2020)
29% | |
Cooper Basin | 38% |
Roma North | 1.0 - 1.2 |
mmboe | |
Atlas |
33%
- >500,000 barrels of oil production hedged at A$90-95/bbl
- Atlas gas fully contracted at fixed prices for FY20 and 95% contracted at fixed prices for calendar year 2020
- Cooper Basin gas fully contracted on fixed prices
Oil swaps | H2 FY20 | FY21 |
(Jan-Jun 2020) | ||
Volume (kbbl) | 199 | 318 |
Weighted average swap price (US$/bbl) | 70 | 67 |
Weighted average swap price (A$/bbl) | 95 | 90 |
Senex Energy Investor Briefing | 11 March 2020 | 23 |
Materially reduced oil price volatility in portfolio
Attractive mix of fixed price gas production and oil price exposure
Foundation Asset Base target production | Delivering Senex's Foundation Asset Base by end FY21 | ||||||||
in FY221 | |||||||||
Cooper Basin | 16% | Atlas gas | 32 TJ/day | Fixed price | |||||
(~2 mmboe/year) | |||||||||
Roma North | Surat Basin | ||||||||
Atlas | 3.6+ | 36% | Roma North gas | 16 TJ/day | Oil linked | ||||
(~1 mmboe/year) | |||||||||
Oil price exposure | |||||||||
mmboe | |||||||||
56% | 64% | 28% | |||||||
Fixed price | Cooper Basin Oil, gas, gas liquids | 0.8 - 0.9 mmboe | Fixed price gas | ||||||
(FY20 guidance) | Oil linked gas liquids | ||||||||
1. Represents Foundation Asset Base, which excludes capital expenditure on exploration, appraisal, development or infrastructure, however does include maintenance and sustaining capital expenditure; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 24 |
Disciplined approach to capital management
Maintaining financial strength for pursuit of sustainable growth in shareholder value
Operating cashflow | Debt funding |
Proven
stewardship of
shareholder
capital
Revenue protection | Capital allocation |
(hedging / fixed pricing) | framework |
Capital allocation framework
Debt repayment
Returns to shareholders
Low cost development of existing oil and
gas reserves
Near-field exploration opportunities
Disciplined review of growth opportunities
to build portfolio quality and scale
Senex Energy Investor Briefing | 11 March 2020 | 25 |
Project delivery and operational excellence
Senex Energy Investor Briefing | 11 March 2020 | 26 |
Operational excellence
Senex delivers best in class execution and cost discipline
- A strong focus on safety and environment across our operations and communities
- Ongoing commitment to quality relationships with our customers, partners and stakeholders
- Optimising production to maximise recovery
- Strong margin generation through operational excellence and rigorous cost control
- Delivering value via innovative solutions for developing and producing oil and gas resources
- Listening and engaging with our people to find better ways to do things
First domestic gas sales at Atlas
Horizontal well section - periscope inversion response
Senex Energy Investor Briefing | 11 March 2020 | 27 |
Surat Basin production continues to outperform
25 less wells required for initial Surat Basin gas production target of 48 TJ/day (~18 PJ/year)
Wells
Gas facilities
Water treatment
Other infrastructure
Roma North | Atlas |
50 wells planned, | 60 wells planned, |
reduced to 35 wells; all | reduced to 50 wells; |
wells drilled | 23 wells drilled |
16 TJ/day processing | 32 TJ/day plus 8 TJ/day |
redundant processing | |
capacity constructed and | |
capacity constructed by | |
sold to Jemena | |
Jemena | |
Low cost irrigation | Senex owned water |
treatment infrastructure | |
solution with landholder | |
under construction | |
5 km pipeline to GLNG | 60 km pipeline to |
infrastructure constructed | Wallumbilla hub |
and sold to Jemena | constructed by Jemena |
First 23 wells of
Daily Surat Basin gas production (TJ)current Atlas drilling campaign brought on
production
First 10 wells of current
Roma North drilling campaign brought on production
Start of Roma North facility commissioning
Senex Energy Investor Briefing | 11 March 2020 | 28 |
Operational excellence in the Surat Basin
Driving best-in-class operational performance
1. A trusted partner
- Relationships with >60 landholders and >30 community groups
- Modest capital investment to transform produced water for landholders
- Supporting local schools, businesses and groups improve the quality of life in the communities in which we operate
2. Best-in-class drilling and completioncycle times1
Days
7 6.3 days45% reduction on average drill time
6 | 5.4 days | |
5 | 3.4 days | |
4 | ||
2.8 days
3
2
1
-
Well #1 - 10 Well #11 - 33 Well #34 - 51 | Best |
3. Solid performance to date during ramp-up
Achievable FY22 full year targets:
- Well availability >95%
- Mean time between failure >24 months
- Unit operating costs <$3/GJ (all-inclusive cost, including field operating costs, tolls, tariffs and royalties)
4. Scaleable expansion opportunities - Roma North
1. Drill cycle times measured from spud to spud
Senex Energy Investor Briefing | 11 March 2020 | 29 |
Maintaining Cooper Basin production
Efficient field development and continued cost discipline
1. Continued low cost efficient operations
- Safe and efficient operations
- Rigorous cost discipline
- Excellent project execution
- Maximising reservoir recoveries
2. Sustaining production through efficient development
- Growler oil field continues to deliver
ProductionGrowler bbl/day | 3000 | |||||||||||||||
3 | horizontal | wells | ||||||||||||||
2000 | ||||||||||||||||
1000 | ||||||||||||||||
0 | ||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
3. Western flank near field extension
- Material exploration upside
- Drill ready prospects
- High impact potential
Senex Energy Investor Briefing | 11 March 2020 | 30 |
Wrap-up
Senex Energy Investor Briefing | 11 March 2020 | 31 |
Key takeaways
A compelling value proposition from Senex transformation
Senex transformation driving a step change in the company
Maximising shareholder returns from existing reserves base
Portfolio free cashflow break even <US$30/bbl1 Brent oil
Robust balance sheet and fully funded to plateau production
Disciplined capital allocation framework from cash generation
- Production targeted to more than triple from FY19 to FY22
- Targeting significant growth in free cashflow to $70-90 million in FY22
- Shareholder returns driven by high quality diversified portfolio and execution excellence
- Exploit low-risk,high-return opportunities within the existing reserves and asset base
- Resilient cashflows from high quality, low cost operations, fixed price gas contracts and proactive hedging programs
- Target Net Debt : EBITDA below 0.5x at plateau production in FY22
- Forecast strong free cashflow generation to allow rapid de-gearing
- Transformation to drive capital management initiatives from free cashflow
- Quality low-risk,high-return expansion and acceleration opportunities from existing portfolio
- Disciplined review of diversification and growth opportunities
1. Figures represent contribution from Foundation Asset Base from FY22; refer to slide 3 (Compliance Statement) for further detail regarding definitions and assumptions
Senex Energy Investor Briefing | 11 March 2020 | 32 |
Q&A
Senex Energy Investor Briefing | 11 March 2020 | 33 |
Investor Enquiries | |
Ian Davies | Derek Piper |
Managing Director and CEO | Senior Advisor - Investor Relations |
(07) 3335 9000 | (07) 3335 9000 |
Level 30, 180 Ann Street | info@senexenergy.com.au |
Brisbane, Queensland, 4000 Australia | |
(07) 3335 9000 | www.senexenergy.com.au |
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Disclaimer
Senex Energy Limited published this content on 11 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 March 2020 22:44:06 UTC