Senex Energy has announced the Final Investment Decision for the $40 million expansion of natural gas production at Atlas in Queensland’s Surat Basin by 50% to 18 PJ/year.
Senex said Atlas is delivering natural gas to a range of manufacturers, supporting manufacturing companies and the hundreds of people they employ in Queensland and interstate. Senex’s customers include the cleaner energy power generator CleanCo, Alinta Energy, building products maker CSR, and the beverage packaging companies Orora and Visy Glass.
Altogether, Senex has invested more than $500 million in gas projects in regional Queensland over the past three years, which the company said was benefiting more than 50 local businesses.
Senex said it will invest about $15 million in the community as part of the Atlas expansion, as it sources goods and services from local firms wherever possible.
Managing Director and CEO Ian Davies said Senex would increase production from the successful Atlas domestic gas project by 50 per cent, with the company on track to deliver material increases in gas sales for manufacturers in the next 12 months.
“Atlas is a high-quality development, providing material and reliable supplies of natural gas to Australian manufacturers, supporting the economy and jobs in local communities,” Mr Davies said.
“The Atlas expansion project will inject around $15 million into regional communities, supporting more than 100 jobs during construction.
“Senex is a producer that continues to grow its natural gas production in a tightening east coast gas market, supporting the economy and jobs, providing affordable and reliable gas supply for industry as Australia transitions to a lower carbon future.”
Earnings boost
Senex also released it’s FY21 results, revealing strong full-year production and earnings growth and an increasing full-year dividend
Davies said Senex’s continued outperformance had strengthened its foundations as a low-cost, low-carbon, high-return business with a long-life asset base and high growth trajectory.
“The 2021 financial year was pivotal in the transformation of Senex. We exited our legacy Cooper Basin oil business, supporting our strong balance sheet, and cemented our position as a leading new natural gas supplier committed to Australia’s low-carbon energy future.
“We achieved consistent and considerable progress throughout the year. Our production, reserves, earnings, balance sheet, growth outlook and dividend – including excellent safety performance with not a single recordable injury during a very turbulent year – all demonstrated the strength and resilience of our strategy.
“Having safely and seamlessly delivered our initial $400 million Surat Basin natural gas development projects in 2020, we more than doubled production and close to tripled EBITDA in 2021.
“We have strengthened our balance sheet, finished FY21 with more than $100 million in cash reserves, and we are generating significant free cashflow to pursue our end-FY25 production target of 60 PJe/year.
“With the 50 per cent expansion of Atlas to 18 PJ/year announced this week, Senex will deliver material production growth in the year ahead for a tightening east coast gas market.
“In doing so, we continue to support the economy and jobs, and supply affordable and reliable natural gas for industry as Australia transitions to a lower carbon future”, Mr Davies said.
The Atlas expansion project investment decision announced this week will take the production capacity of Senex’s portfolio to 27 PJ/year, realising annual EBITDA of more than $130 million/year at prevailing prices.
Senex holds Surat Basin 2P gas reserves of 767 PJ at Atlas and Roma North. This large reserve base supports a master development plan to continue expanding portfolio production up to 54 PJ/year from these areas, with a 2P remaining reserve life of 14 years.
Senex has substantially contracted its existing gas supply for calendar years 2021 and 2022, with material uncontracted supply from calendar year 2023, coinciding with a materially tightening southern gas market and increasingly supportive pricing.
The progression of Atlas to 18 PJ/year is the next phase of growth to drive Senex towards its stated annual production target of more than 60 PJe/year by the end of FY25.
The Senex Board has determined to pay Senex shareholders an ordinary dividend of $0.05 per share (unfranked). The final dividend will be paid on 24 September 2021 with a record date of 1 September 2021.
The final dividend, coupled with the interim dividend of $0.04 per share and the special dividend of $0.04 per share (re-based for share consolidation) takes total dividend payments for FY21 to $0.13 per share. Total ordinary dividend payments in respect of FY21 of $0.09 per share reflect a dividend yield of 2.8%7.
APPEA Chief Executive Andrew McConville said Senex’s Atlas announcement would be a boon for jobs and support hundreds of manufacturing roles in the Sunshine State.
“Senex will produce much-needed gas from regional Queensland for the east coast of Australia, supplying a total of 18 petajoules of gas a year – or more than five times the energy needed to run all the homes in Toowoomba,” Mr McConville said.
“It is yet another example of how the east coast gas market is working to provide secure, reliable and clean energy for Australia.”
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