Shares in onshore oil and gas producer Senex Energy Ltd (ASX: SXY) are now so cheap that over 70% of the company’s market value is made up of cash alone. Cold. Hard. Cash.

Senex Energy today revealed it was holding $100 million in cash, and total liquidity (cash plus undrawn debt) of $177 million, well in excess of the company’s current market capitalisation of $140 million.

I own shares in Senex Energy, but with no debt and considerable additional assets like property, plant and equipment the company appears to me as an attractive proposition for value investors.

It could also be a potential takeover target. The cash could be used towards funding the purchase price, while Senex’s assets, like its considerable Cooper and Surat Basin gas reserves, could easily be integrated into a larger operation.

Back to the cash…

Senex revealed its latest cash position in its fourth quarter production update. Sales revenue dropped 36% year-on-year, but cash jumped from the sale of a block of land to the giant GLNG project, which is 30% owned by Santos Ltd (ASX: STO), netting Senex $42 million.

The sale will shift Senex’s assets around on the balance sheet, but the liquidity of cash will be prized highly by investors given the ongoing oil price uncertainty.

Rather than being free to distribute to investors, the cash will be used to fund the company’s long term growth prospects. By 2017 Senex is aiming to have the first gas production from its Surat Basin assets which will be supported by a 20-year gas sales agreement to the GLNG project.

Gas, rather than oil, is the major growth avenue for Senex Energy, which before the Maisey block sale made up 86% of the company’s energy reserves.

However, in the short term Senex still faces the risk of further oil price falls. This has the potential to further decrease revenues from oil and gas sales, while also causing impairments to assets which get their value from the price of oil.

Foolish takeaway

With a current share price of just $0.12, I view Senex Energy as a well positioned energy company in the current environment. The company’s cash position is a big advantage and will help the company maintaining focus on its clear, actionable growth strategy.

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Motley Fool contributor Regan Pearson owns shares of Senex Energy Limited. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.