Senex Energy: Striking oil, gas the gravy on top


Senex Energy is one of those rare beasts – a profitable oil producer, capping the downside, but with huge exploration upside potential.

Not content with basking in the warm glow of yesterday’s successful appraisal well, mid-cap energy producer/explorer Senex Energy (ASX:SXY) has commenced drilling for unconventional gas in the southern South Australian Cooper Basin.

In partnership with Orca Energy (ASX:OGY), this will be the first of two unconventional gas exploration wells, the second scheduled to spud in October 2012.

Contango MicroCap (ASX:CTN) are fans of Senex, saying despite their relatively low proven and probable resource level current, it is the company’s vast unconventional gas resources that provides the greatest upside to the current share price.

Yesterday, in partnership with Beach Energy (ASX:BPT), Senex struck oil, being successful with the first well of a continuing appraisal program on the western flank of the Cooper Basin.

Senex is targeting oil production of one million net barrels of oil from its currently producing fields in 2012/13. That in itself largely justifies the company’s market capitalisation of $785 million.

Senex are planning a capital spend of $150 million in 2012/13  on their unconventional gas Cooper Basin acreage. Any exploration success should be the icing on the cake. Senex are worth a closer look.

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Bruce Jackson is the Motley Fool’s General Manager. The Motley Fools purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691)