SUNDANCE ENERGY AUSTRALIA LIMITED (ASX: SEA)
Production Remains Healthy: Sundance Energy Australia Limited (ASX: SEA) announced the successful completion of the institutional entitlement offer and shortfall bookbuild on 15 March 2018. According to the group, the institutional component of the entitlement offer raised approximately A$39.8 Mn from the issue of new fully paid ordinary shares at a price of A$0.059 per share. In which, the offer was supported by eligible shareholders who took up approximately 58% of new shares available. Further, the retail entitlement offer will open on March 21, 2018 and the offer price will be the same i.e., A$0.059 per new share. The above move on capital raising came along with the company entering into an agreement to acquire 21,900 net acres and 1,800 boe/d in the Eagle Ford Shale for approximately US$221.5 Mn. The acreage to be acquired is primarily in the volatile oil window of the Eagle Ford near to the company’s existing operation in Texas. In connection with the transaction, the company has entered into new long-term midstream contracts providing firm capacity to move oil and natural gas to market at market rates.
On the other hand, net production in Q4FY17 increased by 4% to 779,298 boe from 750,803 boe in Q4FY16. The average estimated fourth quarter price received per barrel of oil was $52.83 and averaged $39.42 per boe for all products. During Q4FY17, the company brought three new wells into production in McMullen County and one new well in Atascosa County. Meanwhile, SEA stock has risen 31.89% in last six months and was down by 9.1% in last one months as on March 19, 2018. However, SEA has been removed from All Ordinaries S&P/ ASX Index effective March 19, 2018, as per the latest S&P Dow Jones Indices March Quarter Update. While the stock has been hammered a bit in last few days, the potential still seems to be present given the efforts. Thus, we give a “Hold” recommendation on the stock at the current price of $0.061, and would monitor the developments.
Acreage to be Acquired proximal to core McMullen Area Acreage (Source: Company Reports)
WORLEYPARSONS LIMITED (ASX: WOR)
Awarded new contracts: Despite the news of WorleyParsons being awarded a project management consultancy (PMC) contract by Kuwait Oil Company (KOC) for the Kuwait Environmental Remediation Program (KERP), the stock price was noted to witness a plunge of about 1.8% on March 20, 2018. The KERP program, which is funded by the United Nations, is a large-scale environmental remediation and restoration initiative to remediate legacy oil-contamination within KOC oilfields, which were damaged in the 1991 Gulf War. Under the contract, WOR will provide the services from its Kuwait office and the estimated revenue to the Company has been slated to be US$98m over a five-year period.
WorleyParsons also announced that ADNOC Refining has awarded the Company a PMC for the Crude Flexibility Project (Project) at the Ruwais Refinery. This comes under ADNOC’s program to accelerate its downstream strategy delivery by expanding its crude processing options. Under this, WOR will oversee the performance of the EPC contractor through the design and procurement phases over the next 14 months. Thereafter, the Company’s team will transition to the Ruwais Refinery site to supervise the construction and commissioning works until the final delivery of the Project in 2022.
Given the expansion of WOR’s contracts’ base and one year stock price surge of about 45%, we have a “Hold” on the stock at the current price of $14.65.
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