The Senex Energy Ltd (ASX: SXY) share price is sliding today, despite the company announcing a new gas sales agreement. During mid-morning trade, the energy producer's shares are down 1.3% to 38 cents.
Let's take a closer look at what Senex updated the market with.
New gas agreement
The Senex share price is in negative territory regardless of the positive announcement made by the company earlier today.
According to this morning's release, Senex has entered into a new gas sales agreement with CleanCo Queensland.
Established in 2018, CleanCo is a government-owned electricity generation and trading company. The business is focused on providing reliable clean energy solutions at a competitive price for the people of Queensland.
The contract is expected to deliver 2.55 petajoules of natural gas from the Wallumbilla Gas Hub. This brings Senex's total amount of gas supplied to CleanCo to more than 5.1 petajoules over the 2020–22 calendar years. One petajoule is equivalent to powering 19,000 homes for an entire year, or almost 100,000 dwellings with 5.1 petajoules.
The agreement is for a 1-year term and is scheduled to commence on 1 January 2022. The price of the gas will be at a fixed amount that is in line with current market rates.
Management commentary
Senex managing director and CEO Ian Davies welcomed the new deal, saying:
The strong ongoing relationship between Senex and CleanCo contributes to security of power supply that helps the recovery of the Queensland and Australian economies.
Senex will continue to build a portfolio of gas sales agreements that support jobs and regional economies as we partner with commercial and industrial customers for long-term and mutually beneficial relationships.
Each of our long-term and mutually beneficial relationships – with partners also including CSR, Orora, Visy Glass, Alinta Energy and Southern Oil Refining – reinforces Senex's significance as a supplier of natural gas to the east coast market.
About the Senex share price
The Senex share price has been a solid performer over the past 12 months, rising by more than 90%. The company's shares hit a multi-year low of 12 cents last March, but have since recovered on an upwards trajectory.
Based on current valuations, Senex commands a market capitalisation of around $565 million.
