SINCE listing on the ASX in 1984, Senex Energy has been expanding its portfolio.
Formerly known as Victoria Petroleum, it was initially focussed on developing petroleum prospects across Australia and the US. The company changed direction in 2009 as it moved into CSG exploration in Queensland while selling off its US petroleum interests.
The name change in 2011 emphasised its new focus on oil and gas exploration, development and production. Senex moved its headquarters from Perth to Brisbane and appointed a new management team tasked with increasing the company’s acreage along Australia’s east coast.
Senex now has a market capitalisation of more than $1 billion and it entered the S&P/ASX 200 in February this year.
Oil in the Cooper Basin
It has been a trying couple of years for Senex’s operations in the Cooper Basin as flooding across Queensland and South Australia resulted in oil production and exploration grinding to a standstill.
Despite ‘once-in-40-year’ floods, the company moved quickly to develop infrastructure, including roads and pipelines, to ensure that oil production resumed with 12 months at the Snatcher oil field: a joint venture between Senex (60 per cent) and Beach Energy (40 per cent).
The Snatcher-1 and Snatcher-2 wells recommenced production in early 2012, as Senex also brought a third well, Snatcher-3, into production.
Senex managing director Ian Davies said he believed that the new hydraulic pumping units installed on the wells would help the company make up for lost time.
“Before the field was inundated in 2010, Snatcher-1 and Snatcher-2 were producing more than 500 barrels of oil per day (gross) from the mid Birkhead channel sands,” he said.
“We have agreed on an accelerated program for the field with our joint venture partner Beach Energy Limited.”
The now cased and suspended Snatcher-4 appraisal well was spudded in May, and has been marked by the company as a future oil producer after it successfully intersected a 10m gross oil column.
Senex plans to expand its drilling program to 14 wells on the western flank of the Cooper Basin and has achieved another milestone in May after the Cuisinier-4 oil well was also cased and suspended as a future oil producer.
The well is the first of four that will be drilled in 320,000 acre ATP 752P in the Barta Block during the second half of 2012. Senex holds a 15 per cent interest in the Barta Block. Santos is the operator (60 per cent) and Bengal Energy holds a 25 per cent interest.
Bengal vice president of exploration Jim Mott said the initial success of the exploration wells was a good indicator of oil prospectively in the area.
“The production performance of the Cuisinier-1 well continues to exceed expectations, confirming the Cuisinier discovery as a significant find in the Cooper Basin,” he said.
As production in the oil fields recovers from seasonal flooding, Senex is producing around 4500bopd. That figure expected to increase during the coming weeks.
Prior to the flooding, the company had been on track to exceed its target of 700,000bbl of oil for 2012 by producing more than 6500bopd.
Despite the setback, Senex has announced a target of 1 million bbl of oil from its current producing fields in 2013.
Mr Davies said the target represented the expected continued growth of the business “Senex is looking forward to a full year of production operations in 2012-2013, with weather risks substantially reduced by the construction of pipeline infrastructure from our western flank oil fields to Moomba,” he said.
“Achieving one million net barrels of oil will represent an exciting milestone for the company.”The ambitious target follows Senex’s receipt of independent certification for a major oil reserve upgrade across its Cooper Basin acreage, including a 90 per cent increase in reserves at the Growler oil field.
“The increase of 1.7 million barrels of oil in net proved and probable reserves represents potential additional revenue to Senex of over US$200 million at current oil prices,” Mr Davies said.
The company has also begun extensive 3D seismic surveying in the Cooper Basin, searching for conventional oil and gas prospects in an approximately 790 square kilometre area.
Perth-based Terrex Seismic was awarded the $11 million survey contract after fending off competition from other tenderers. “Senex is implementing an aggressive growth strategy for our oil business based on the rapid development of known resources and the comprehensive exploration and appraisal of other prospective areas in the Cooper Basin,” Mr Davies said.
“We expect this work in the north of the South Australian Cooper Basin will identify development targets for the short and medium term.”
The survey will cover two of Senex’s wholly-owned areas in South Australia, PEL 88 and PEL 90M, and the partially-owned northern area of PEL 514 (50 per cent Senex and 50 per cent Planet Gas).
Senex is hoping for similar shows to PRL 15 and PEL 111 in the Growler and Snatcher oil fields respectively, which would support the potential discovery of hydrocarbons in the area.
Unconventional gas in the Cooper Basin Senex currently holds large unconventional gas acreage, thanks in part to the acquisition of Stuart Petroleum in 2011.
The takeover took three months and gave Senex a significant foothold in oil and gas exploration and development in the Cooper Basin.
The transaction roughly tripled the company’s land tenements and boosted its ASX position.
Senex’s acreage in the Cooper Basin includes areas of the Roseneath and Murteree shales, the Toolachee and Patchawarra coals, and the Toolachee tight sand and coal sequences.
Exploration began in May 2011 with the successful drilling of the Vintage Crop-1 appraisal well.
Senex’s foray into unconventional gas continued when the Sasanof-1 exploration well in PEL 516 indicated potential for significant gas shows.
This success prompted the company to spud a second unconventional gas well, Talaq-1, in April.
“Successful exploration at Sasanof-1 is the first major step in unlocking a globally significant unconventional gas resource in the southern Cooper Basin,” Mr Davies said.
“These initial results confirm that PEL 516 shares many of the characteristics of successful US conventional gas plays.”
Coal seam gas CSG production in Queensland is centred on the Surat Basin and Senex currently holds four strategically-located tenements near established pipelines.
The permits’ proved and probable reserves have recently been significantly upgraded to 138.1 petajoules and 314PJ respectively.
Recent CSG appraisal delivered successful results after the Kato-2 exploration well had gas flow to the surface, with initial results indicating excellent permeability plus good coal and carbonaceous shale thicknesses.
According to Mr Davies, the upgrade would allow Senex to position itself to capitalise on the increased demand for LNG.
“Our acreage in the Surat Basin contains a significant resource capable of making a material contribution to the east Australian gas market.
“With more than 500PJ of net reserves and resources now certified, Senex is clearly well positioned to meet growing gas demand.
“We have gas-rich permeable coals close to existing gas infrastructure and we look forward to continuing focussed field appraisal and production testing through the 2012-2013 financial year,” he said.
The deposit upgrade was welcome news following English shareholder BG Group’s sale of its 8 per cent stake in Senex, causing Senex stock to drop 7 per cent.
The 73 million share shares were sold at $1.02 per share in an oversubscribed book build to domestic and international investors.
The two companies remain JV partners in two CSG tenements in the Surat Basin.
Discoveries in the region are believed to have the potential to supply natural gas projects now under construction in Gladstone, Queensland.