Two of the smaller oil and gas explorers focusing on the Cooper Basin gave investors a boost of confidence last week by announcing strong exploration and production results. Senex Energy (ASX: SXY) and Drillsearch (ASX: DLS) both held their AGMs last week, providing positive updates and guidance for the year ahead.
Drillsearch Managing Director Brad Lingo presented a particularly glowing update, noting that production for the year to date so far in FY14 is already greater than the total production for FY13. Production so far this year is at 1.14 million barrels of oil and on track to meeting production guidance of 2.3-2.5 million barrels. This would be more than double FY13's total production of 1.1 million barrels.
At Senex Energy's AGM, Managing Director and CEO Ian Davies presented investors with examples of value creation and the progress being made towards the company's strategy to focus on oil production to fund future gas discoveries.
Over the last three years, Senex has increased oil production by a massive 793% and 2P (proven and probable) oil reserves by 575%. Strong growth is forecast to continue into the 2013/2014 financial year with production growth estimates of 20% and 2P reserves growth of 4-6 million barrels.
Senex's big growth plans are being helped by the company's ability to drive operational efficiencies and replicate lean processes from other companies, keeping costs down and shareholders happy.
Senex also used its AGM to announce a significant new oil discovery at its Worrior oil field. Senex, which owns a 70% stake in the field in conjunction with Cooper Energy (ASX: COE) (30%), announced that the Worrior-8 development well had intersected net oil pay of 18 meters.
The company also said that reinterpretation of previous Worrior wells had indicated that oil and gas accumulations may extend much further than initially anticipated.
Foolish takeaway
The updates were pleasing for investors of both Drillsearch and Senex. Both companies also remain at attractive share prices given their significant potential and outstanding performance to date. With the strong growth forecast for natural gas demand in the coming years, continued exploration success could see their respective share prices taking off.
