Senex tells investors to sit down, it’s expecting a $113m writedown
Oil and gas explorer Senex has foreshadowed a $113 million impairment charge over its Cooper Basin exploration assets in its upcoming full-year books.
But it’s also counting a one-time $17 million benefit from a deal made with Beach Energy (ASX:BPT) earlier this year as profit.
The benefit stemmed from a deal with Beach, where they inherited a commitment to “free-carry” the work on Senex’s (ASX:SXY) unconventional gas project after buying Senex’s gas partner Lattice Energy.
Free-carry means Beach has committed to paying for the work on the project.
But both companies agreed oil was a more exciting option right now than coal seam gas, and they switched the commitment to Senex’s Cooper Basin western flank oil assets.
Senex is now counting that as a $17 million addition to its full-year profit figure.
The final acounts are due August 21.
As the company focuses on its Cooper Basin oil assets and two gas projects, it’s been taking a hard look at acreage that’s not in the area or oil.
As a result it’s written the value of all non-core exploration land down to zero because it doesn’t plan to spend much money on these assets.
Underlining that focus on oil was new that Senex has found oil in the first well of its new financial year 10-well drilling campaign.
Logs for the Breguet-1 well indicates net pay, or the thickness of a possible oil or gas discovery, of up to 5.7 metres within an 18.5 metre gross oil column.
Testing across a depth of 1,673 metres to 1,689 metres indicated the presence of moveable oil.
Earlier this week Senex said it had all government approvals with which to launch its second gas project.
Senex shares dropped 2 per cent to 48c.