The Senex Energy Ltd (ASX: SXY) share price is up nearly 30% in three months.
Senex Energy Ltd Share Price
As you can see in the chart above, the Senex Energy share price has gained almost 30% despite its two larger peers, Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) plumbing new lows.
What's going on?
Earlier this year, the $420 million Senex announced a capital raising to develop its key project in the Western Surat basin, of the Maranoa region, Queensland. Senex announced the $95 million capital raising to fund the development.
The company recently committed to a $50 million investment in the project, with wells expected to come online by the middle of this year. It is forecast to have annualised production of around 600,000 barrels of oil by mid-2018. That's around 10 terajoules per day. Senex has signed a 20-year sales agreement with Gladstone LNG (GLNG) for up to 50 terajoules of gas per day.
Meanwhile, the company's South Australian assets in the Cooper Basin are expected to generate 800,000 barrels of oil equivalent in its 2017 financial year.
"Looking ahead, we anticipate our Cooper Basin oil and gas production profile to plateau before transitioning to growth in the near term," Senex Managing director, Ian Davies, said last month. "Further, we anticipate a material production contribution from our flagship Western Surat Gas Project from FY18, with gas volumes to increase year-on-year."
Is Senex a buy?
At today's prices, Senex might be considered good value. At 31 December 2016, it had $83 million of cash with another $93 million coming online from its capital raising. Although much of that will be committed to an investment program, it appears a lot healthier than other debt-laden or under-funded oil producers. However, Senex is a high-risk investment and dependent upon commodity prices. For those reasons, it's not at the top of my buy list.
