SENEX STRIKES RED
Written on the 25 August 2015
A SHARP decline in global oil prices has hit Senex Energy Limited's (ASX:SXY) bottom line, with the energy company posting a full-year loss of $80.6 million.
The result is down from a profit of $37.9 million in the previous year, following $97 million in impairments against exploration assets in the Cooper Basin.
Revenue also tumbled 32 per cent down to $115.9 million, while underlying profit remained in the black at $5.6 million compared to $44.7 million in FY14.
Senex managing director and CEO Ian Davies says despite the steep fall in prices, the company demonstrated strong performance.
He says the company achieved solid production levels from existing oil fields, as well as made its first Namur oil discovery at the Cooper Basin.
Gains made in the gas business were not enough to offset the decline in oil, however a coal seam gas asset transaction in the Surat Basin has generated an uplift in the portfolio.
"Senex enters 2016 in a good financial position," Davies says.
"We responded rapidly and prudently to the changed market conditions by reducing capital and operating expenditure, protecting FY16 revenues with an oil hedging program, and establishing an unsecured $80 million corporate debt facility that remains undrawn.
"With $49 million in cash at 30 June, cash flow from operations, no drawn debt and continued spending discipline, the Senex business is in a good shape as we pursue our long-term growth-driven strategy."
Senex will focus on cash preservation across its assets in FY16 to shield against the downturn. The company also plans to advance a gas exploration work program with Origin Energy, which is valued between $25 million and $35 million.
"As Senex pursues value creation for shareholders, our number one priority is maintaining the financial strength of the business against a backdrop of continuing lower oil prices," Davies says.
"Senex remains growth focused and the prioritisation of our most material and advanced gas project represents a step change in the creation of a material gas business for Senex."