The Senex Energy Ltd (ASX: SXY) share price is charging higher today on the back of a trading and earnings update. After sitting as much as 17.5% higher before midday, Senex shares have slightly pulled back to be up by 15% at the time of writing at 23 cents per share.
Senex Energy is an independent Australian oil and gas exploration and production company. It has a portfolio of onshore oil and gas assets in Queensland and South Australia, with access to the nation's east coast energy market.
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What did Senex announce?
The highlight of this morning's announcement was upgraded FY20 guidance.
Following strong production performance across the company's Surat Basin assets, Senex has increased its full-year FY20 production guidance to between 2.0 and 2.1 million barrels of oil equivalent (mmboe). This is up from the previously guided range of 1.8 to 2.0 mmboe.
In addition, Senex also increased its full-year FY20 guidance for earnings before interest, tax, depreciation and amortisation (EBITDA). The company now expects EBITDA in the range of $45 million to $55 million, up from previous guidance of between $40 million and $50 million.
These upgraded figures assume continued normal operations in the current COVID-19 environment.
Atlas drilling campaign update
Senex also revealed that natural gas production continues to outperform at both Roma North and Atlas in the Surat Basin. As a result, production now exceeds 34 terajoules (TJ) per day.
Given the continued production and reservoir outperformance, the company announced it will further reduce the number of wells to be drilled at Atlas from 50 wells to 45 wells.
The company expects to complete the current drilling campaign in the coming weeks, with final wells to be brought into production during June 2020. Additionally, Atlas water infrastructure is on schedule to commence commissioning and water intake in June. The completion of all works is expected in early FY21.
Roma North gas production update
Also detailed in today's announcement was the agreement between Senex and GLNG to re-direct around 1 petajoule of natural gas from Roma North to the domestic market.
Following currently lower LNG offtake requirements at GLNG, the two parties have agreed to re-direct these volumes to the Wallumbilla natural gas supply hub over the period of June to August 2020.
Senex will market this natural gas, along with higher than expected production from Atlas, to east coast gas customers as part of the company's supply portfolio.
Management commentary
Commenting on today's update, CEO Ian Davies said:
"In October 2018, Senex reached the Final Investment Decision for our $400 million capital program in the Surat Basin. Less than two years later, the transformational Roma North and Atlas natural gas development projects have established Senex as an important producer of gas for the east coast market."
"Our announcement today of an increase in full year FY20 production and EBITDA guidance further reinforces the underlying strength of our transformed east coast natural gas business and our ability to adapt and grow in the current lower oil price environment," he added.
