In today’s daily we have covered stock research on SENEX Energy (BUY).









 
TheS&P 500 was down by 6.82points or 0.34%on Monday to 1995.51 points. U.S. stocks were down slightly in volatile trading on Monday afternoon as investors assessed the impact of another big drop in oil prices. S&P 500 traded below its 50-day moving average for the first time since Oct. 28. Shares of pet supply retailer PetSmart rose 4.2 percent after it agreed to be bought by a private equity consortium led by BC Partners Ltd for $8.7 billion, in the largest leveraged buyout of the year.

Investors are also waiting for the Fed’s update on the timing and pace of interest-rate increases. Policy makers may decide on Dec. 17 whether to keep their pledge to hold interest rates low for a considerable time. McDonald’s Corp., Chevron Corp. and Goldman Sachs Group Inc. lost more than 1.1 percent for the biggest declines in the Dow.  European shares tumbled again on Monday, resuming last week’s sharp sell-off as the relentless drop in oil prices hurt energy shares and fuelled fears of deflation in the euro zone. 




Goldman Sachs  Daily Chart (Source – Thomson Reuters)
S&P ASX 200was down by 33.5 points or 0.64%on Monday and closed at 5186.1 points.  ANZ slipped 0.77 per cent to $30.76, Commonwealth Bank slid 0.57 per cent to $81.27, National Australia Bank dived 1.47 per cent to $31.48 and Westpac lost 0.72 per cent to $31.82. Recall Holdings rejected a $2.2 billion takeover offer from larger US rival Iron Mountain, saying the offer price did not reflect the potential merger benefits. 
Coca-Cola Amatildropped 0.45 per cent to $8.88 on news it and its major shareholder. Shares in Wesfarmers crashed 2.17 per cent to $40.52. BHP Billiton dropped 0.46 per cent to $28.33 and Rio Tinto dropped 0.32 per cent to $53.50. SPI futures are down 28 points. The Australian dollar is trading at US82.15¢, compared with US82.49¢ at Monday’s local close.

Recall Holdings Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
Stock of the Day - SENEX Energy (BUY)

Senex Energy Limited (SXY) provided a significant update about its review of expenditure to retain strong net cash position at end FY15. The Company has begun a review of capital, operating and administrative expenditure for the remainder of FY15 in response to current market conditions and the lower oil price environment. SXY has undertaken measures to reduce discretionary expenditure and to high-grade future capital investments while targeting development and production enhancing activities. SXY reported that it neither plans nor needs to raise equity in view of its position of financial strength. The Company remains confident of its oil business which is continuously generating profits and cash flow at current oil prices. With this, SXY believes to exceed the annual production guidance of 1.4 million plus barrels of oil equivalent in FY15.


SXY Oil and Gas Fields in South Australia (Source – Company Reports)

SXY lately reported the commencement of commercial production of gas from the Hornet field in the Cooper Basin. The Hornet-1 gas well within PRL 105 tested at a flow rate of more than two million standard cubic feet per day in pre-commissioning. SXY is selling the gas from the Hornet field to the South Australian Cooper Basin Joint Venture (SACB JV) under a gas sales agreement. Since commissioning, the Hornet well has been reported to deliver stable flow rates of around 1.3 million standard cubic feet per day with associated liquids (condensate and LPG) from the field on a 25% choke.


Pipeline Testing at Hornet Gas Field (Source – Company Reports)

The Kingston Rule-1 well is awaiting work-over with production expected in early 2015. SXY expects to deliver an incremental production from Kingston Rule-1 from early 2015 following the work-over of the well.


Production and Sales (Source – Company Reports)

Further, the operational updates elucidate that first production has been achieved from the Namur reservoir in the Martlet oil field. This along with the Hornet gas field project are expected to contribute strongly to annual target of 1.4 million plus barrels of oil equivalent. Specifically, the progress for the recently discovered Martlet oil field in the Western flank of the Cooper Basin, located in PEL 104 (SXY 60% and operator, Beach Energy Limited 40%) entails testing of the Martlet-1 well flow at the equivalent of 5,149 barrels of fluid and 2,596 barrels of oil per day from the target Namur reservoir. The construction on water management facilities once complete will increase production capacity from the field during 2H FY15.


Oil and Gas Production (Source – Company Reports)

The November 2014 drilling updates revealed that SXY drilled seven wells of its FY15 drilling program in the South Australian Cooper-Eromanga Basin, and spudded the eighth. The Akela-1 oil exploration well (PEL 110: SXY 60% and operator, Cooper Energy 20%, Orca Energy 20%) was spudded and was drilled to a total depth of 2,676 metres for stacked oil potential across an interpreted four-way dip-closed structure. The best oil shows occurred in the Birkhead Formation. The Company also reported that a potential hydrocarbon bearing zone in the form of a basal sandstone in the Birkhead Formation was identified. However, sampling of reservoir fluids could not be proceeded owing to poor borehole conditions. Sheerkhan-1 oil exploration well (PEL 182: SXY 57% and operator, Drillsearch 43%) was spudded and the well reached a total depth of 2,350 metres. Evaluation of stacked oil potential across a mapped four-way dip closure interpreted on the Dundinna 3D survey is underway.

Strong production testing results at the Vanessa conventional gas field in the South Australian Cooper Basin have been reported. The production testing of the Vanessa-1ST exploration well, located in PEL 182 (SXY 57%, DrillSearch 43%) is complete. During the testing, gas flowed to surface at an average rate of 5.0 million standard cubic feet per day from the Epsilon and Toolachee formations on a 65% choke. Further analysis to determine gas composition and associated liquids is underway. This well is located about 4 kilometres from existing gas transmission infrastructure with the PEL 182 JV. As per SXY, the JV plans to bring the well online, and subsequently consider appraisal and development opportunities.


Financial Updates (Source – Company Reports)

SXY also secured a material 100% owned Surat Basin gas project through agreement with QGC JV to swap minority interests in eastern gas permits. The agreement has now gone unconditional. The Company’s quarterly updates ending September 2014 also revealed oil production of 0.38 million barrels (mmbbls); and second highest quarterly oil production after record result achieved in  Q4 FY14 (0.43 mmboe) and 27% ahead of production achieved in corresponding period FY14. The oil revenue declined by 14.9% quarter on quarter to $42.4 million owing to lower average oil price. The Company also reported $69.4 million cash balance with zero debt as at 30 September 2014. SXY is working for the planning work related to the $185 million farm-in transactions with Origin Energy. The JV has finalized a plan for over 300 km² of 3D seismic, with the program expected to start in early 2015. Very recently, Cooper Energy advised that Jenners-1 was spudded in PEL 100 of the South Australia Cooper Basin wherein JV participants include Cooper (19.165%), Santos (25.835%), and SXY (Operator, 55%).


Senex Energy Daily Chart (Source - Thomson Reuters)

Overall we like the show, and accordingly, reiterate a BUY recommendation for this stock at the current price of $0.275.


 
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