The Senex Energy Ltd (ASX: SXY) share price is soaring higher today following the announcement the company has sold its Cooper Basin business.
At the time of writing, shares in the Australian oil and gas exploration company are up 7.02% to 30.5 cents.
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Cooper Basin sale
Senex advised that it has entered a binding agreement with Beach Energy Ltd (ASX: BPT) to sell its South Australian Cooper Basin assets.
The sale will result in Senex's exit from Cooper Basin after operating there for more than 20 years. Proceeds of the sale will be used to support its plans to accelerate the development of its Surat Basin natural gas assets. This will allow the steady flow of increasing the natural gas supply to the east coast of Australia.
Senex has so far invested more than $400 million in its Surat Basin project, to which the sale will strengthen its balance sheet. A proforma net cash position of roughly $30 million is forecast.
The company said that it was well-positioned to grow shareholder value through its Surat Basin production due to its expansion opportunities, capital management initiatives and strong cash flow generation.
The agreed sale amount of $87.5 million is expected to be completed by early 2021. Senex will provide an updated FY21 guidance and outlook at its scheduled investor briefing on November 5.
What did management say?
Commenting on the milestone agreement, Senex managing director and CEO Ian Davies said:
The sale of our Cooper Basin assets will strengthen Senex's balance sheet to accelerate the development of our material Surat Basin natural gas asset position.
Senex is uniquely positioned to increase supply of affordable natural gas to the domestic market. Our hub-and-spoke infrastructure operating model is established in the Surat Basin, and we have a diverse portfolio of low-risk, high-return investment opportunities to pursue from our extensive gas reserves position.
The sale of our Cooper Basin assets follows a deliberate and considered strategic review of Senex's asset portfolio. Beach's existing operations and experience in the Cooper Basin, including as joint venture partner in our western flank oil assets, means it is ideally placed to acquire these assets and ensure a smooth transition and ongoing stewardship, as well as providing a number of ongoing employment opportunities.
