Beach Energy Ltd


BPT Details

Positive drilling results: Beach Energy Ltd (ASX: BPT) updated that its South Australian Gas JV development project with Santos 66.6% and Origin 13.19% witnessed commencement of a five?well development campaign in the Tirrawarra?Gooranie Field. Further, the four?well near?field exploration and appraisal campaign in the ex PEL 513 permit area was completed. BPT also reported commencement of the three?well appraisal campaign in the Durham Downs Complex, which is located approximately 30 kilometres north of the Ballera gas processing plant. With regards to Ex PEL 101, the second well of a two?well gas exploration campaign in PRL 174, Jute?1, was cased and suspended for further testing in February 2016.
 

Cooper Basin Wells (Source: Company Reports)
 
BPT reported in its quarterly update about 5% rise in sales volumes to 2.6 MMboe due to the Drillsearch merger and higher gas volumes. This was affected by timing of crude oil shipments to some extent. Quarterly production surged 8% to 2.4 MMboe due to the Drillsearch merger and sustained oil production from ex PEL 91. Drillsearch merger got completed in March 2016 and BPT estimated annual cost savings of up to $40 million (pre-tax) to be fully realised in FY17. The positive developments coupled with improving commodity market drove Beach Energy stock by over 52.38% in the last three months (as at May 10, 2016) and we believe that the positive momentum in the stock would continue in the coming months. Accordingly, we give a “BUY” recommendation on BPT at the current price of $0.658
 

BPT Daily Chart (Source: Thomson Reuters)
 
Senex Energy Ltd


SXY Details

Quarter results and hedging program: Senex Energy Ltd (ASX: SXY) recently reported for Q3 FY16 performance with strong financial position with cash of $101 million and total liquidity of $178 million. The key highlights included to be cost reductions with FY16 capex guidance reduced by 30%. On the other hand, SXY narrowed its FY16 production guidance to 1.0 - 1.05 mmboe at the back of delays to connection of Vanessa gas field. Net production of 0.25 mmboe was also down 4% with natural field decline equipoised by the contribution of new wells. Net sales volumes of 0.24 mmboe dipped 8% compared to the prior quarter. Nonetheless, the company protected revenue with the successful execution of a hedging program for H1 FY17. Specifically, SXY leveraged the recent rally in the Brent oil prices by entering into put options which would offer a revenue protection for around 400,000 barrels of oil to the group. SXY stock surged over 55.17% in last three months (as of May 10, 2016). Management reported that their put options would assure a Brent oil floor price of US$45 per barrel (which is $62 equivalent) for the six month period, while the group would leverage any possible increase in Brent oil prices beyond this level.
 

Revised FY16 Guidance (Source: Company Reports)
 
Senex have been controlling its costs in the recent past to offset the oil prices pressure impact on its margins. With this hedging program, the group could further control its operating and corporate cash costs while protect its margins. Commencement of Phase 1 appraisal work program for Western Surat Gas Project has also been reported. Based on the foregoing, we recommend a “BUY” on the stock at the current price of $0.233
 

SXY Daily Chart (Source: Thomson Reuters)
 
AWE Limited


AWE Details

Rejection of proposal: AWE Limited’s (ASX: AWE) recently rejected an unsolicited indicative, conditional and non-binding proposal from Lone Star Japan Acquisitions Ltd for acquiring all shares in AWE for A$0.80 per share. AWE also announced about selling 42.5% interest in Bulu PSC, including undeveloped Lengo gas project for up to A$27.5 million. The March Quarter report highlighted year to date production of 4.2 mmboe which is up 13% over the previous corresponding nine months. However, total production of 1.3 mmboe for the March quarter was down 13% over the previous quarter at the back of planned maintenance at Casino, BassGas and Tui and the sale of Sugarloaf. On the other hand, AWE reported for commencement of construction of Stage 1A of the Waitsia Gas Project following the award of construction contracts in March. The company had net cash of $52 million with no debt and undrawn facilities of $400 million, as at 31 March 2016.
 

Awe Java Sea (Source: Company Reports)
 
AWE stock surged by 5.13% in the last one month (as of May 10, 2016) and we remain bullish on the stock and recommend a “BUY” at the current price of $0.74
 

AWE Daily Chart (Source: Thomson Reuters)
 
Strike Energy Ltd


STX Details

Favorable Klebb pilot results: Strike Energy Ltd (ASX: STX) reported that its Southern Cooper Basin Gas Project’s Klebb pilot results indicated strong gas flow rates during the December quarter, wherein the  Field measurements confirmed that the Klebb pilot could retrieve huge reservoir volume. Moreover, the group reported that the scoping and preliminary design approves a low cost modular gas processing and compression facility (Demonstration Facility) at PEL 96. Accordingly, the group made an agreement with a major midstream gas infrastructure operator to develop the Demonstration Facility.
 

Klebb Production Facility (Source: Company Reports)
 
In fact, upgrades of the Klebb 1, 2 and 3 pump equipment and automation systems were reported to be completed during April with all wells successfully commissioned and on test by month end. Further, the Klebb 4 fracture stimulation and electric submersible pump (“ESP”) completion is said to be on track to be completed in June. The positive Klebb developments and improving commodity market would drive the stock higher and hence we place a “BUY” on the stock at the current price of $0.105
 

STX Daily Chart (Source: Thomson Reuters)

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