- Senex Energy (SXY) commits to $40 million expansion of natural gas production at its Atlas project in the Surat Basin of Queensland
- SXY has taken the final investment decision to expand production at Atlas by 50 per cent, to 18 petajoules (PJ) per year
- The capital expenditure will go towards natural gas wells, gas gathering and water management infrastructure to be funded from existing cash reserves
- Overall the development marks the company’s next phase of growth towards its annual production target of 60 PJ per year by the end of FY25
- Company shares are trading steady at $3.13
Senex Energy (SXY) has committed to the $40 million expansion of natural gas production at its Atlas project in the Surat Basin of Queensland.
The company has taken the final investment decision to expand production at Atlas by 50 per cent, from 12 petajoules (p/j) to 18 PJ per year.
Over the June quarter, the company said its growth projects were on track and it had signed additional customer contracts.
In particular, the company said the Atlas expansion is supported by recent domestic manufacturer gas sales agreements, including with metals processor Nyrstar and construction materials company Adbri.
It believes the expansion provides a low-cost, low-carbon, high-return and long-life investment to support increased domestic natural gas supply to Australian manufacturers and other domestic users.
The capital expenditure of $40 million will go towards natural gas wells, gas gathering and water management infrastructure which SXY said will be funded from existing cash reserves.
The company expects this investment decision will take the production capacity of Senex’s portfolio to 27 PJ per year, realising annual earnings before interest, tax, depreciation and amortisation (EBITDA) of more than $130 million per year at prevailing prices of $8.50 per gigajoule.
Senex Managing Director and CEO Ian Davies said the expansion will inject around $15 million into regional communities, supporting more than 100 jobs during construction.
Overall, the development marks the energy stock’s next phase of growth towards its annual production target of more than 60 PJ per year by the end of financial year 25.
Moving forward, Senex said it’s finalising arrangements with gas and electricity provider, Jemena, to construct and fund the processing facility expansion at Atlas, under an extension of existing tolling arrangements, with commissioning expected in the first quarter of FY25.
Moreover, the company is planning to kick off its drilling program in September 2021 and said it’s consequently on track to deliver a material increase in gas sales in the next 12 months.
Shares were trading steady at $3.13 at 12:33 pm AEST.