If you're hunting for great investing bargains today, Senex Energy Ltd (ASX: SXY) should be at the top of your list.
Yes, it relies on oil for revenues. And yes, the company's earnings will fall heavily in response to the drop in oil price. But the company also appears to have been brutally sold off by investors in excess of the recent drop in oil prices.
Oil prices are down 38% on where they were at the start of 2014, however shares in Senex are down a whopping 61%, outpacing Santos Ltd (ASX: STO) down 42%, Drillsearch Energy Limited (ASX: DLS), down 42% and Beach Energy Ltd (ASX: BPT), which is down 35%.
Source: Google Finance
The significant fall does not spoil Senex Energy as a well-run company. The company operates with low costs, high margins and without the burden of debt, so it is surprising the company has been sold down so extensively.
One reason could be that Senex was trading at a premium price prior to the fall in in oil, so had further to fall. This could be, but with strong growth prospects which are underscored by funding from other companies through farm-in agreements, a premium for growth seems fair.
Senex Energy is aiming to increase energy reserves by as much as 275% by 2018, to up to 150 million barrels of oil equivalent (mmobe). And while the future of oil prices is anything but certain, investors have the chance to buy this production growth at a fraction of its real value.
