Senex brings out the big guns

SENEX Energy is getting into bed with US private equity fund EIG Global Energy Partners to help accelerate the gas developments Australia.
Senex brings out the big guns Senex brings out the big guns Senex brings out the big guns Senex brings out the big guns Senex brings out the big guns

Sunrise at Senex's operations.

Haydn Black

Reporter

EIG had held 2.7% in Senex, and will emerge with 12% of the company following a $55 million placement.
 
EIG, which has invested more than $23 billion in more than 310 companies, including Breitburn Energy Partners and Chesapeake Energy , has agreed to become a substantial holder in Senex, and to establish a funding model to accelerate development of the company's flagship Western Surat Gas Project.
 
Senex managing director Ian Davies said working with the PE company would give his oil and gas producer the momentum it needed to develop and expand its significant upstream positions in both the Surat and Cooper Basins, to address substantial opportunities in the east coast gas market.
 
"We know the Western Surat Gas Project is a great asset, given our understanding of the subsurface and our ability to operate safely and at low cost," he said in a statement this morning.
 
"EIG is a respected global energy investor and their support shows they also see the opportunity for Senex to build a significant east coast gas business," he said.
 
EIG CEO R Blair Thomas said the Western Surat project was in a prime position to supply gas into the structurally short east coast gas market.
 
"EIG has been an early investor in coal seam gas in Queensland since the late 1990s, and we believe now is the opportune time to develop these assets as fundamentals are supportive," Thomas said.
 
"Senex has the right people to develop the project and in long-term partnership with EIG we believe the company will build a tier-one asset."
 
Senex is seeking Foreign Investment Review Board approvals to place the $55 million in shares with a number of EIG-managed funds and institutional investors at $0.315 per share, a small premium to recent trading, and will look to tap existing shareholders for up to $40 million more in a share placement plan. 
 
The cash will be used help accelerate work across Senex' leases, but EIG has also offered up to $US300 million ($A396 million) in total to speed up the development of the Western Surat CSG project.
 
Davies also said that he wanted to use some of the cash to increase Senex's nascent Cooper Basin gas business, where it is primarily working with Origin Energy in the Patchawarra Trough, although it has numerous other gas opportunities that have previously been sidelined in favour of the easier oil opportunities .
 
The Western Surat Gas project already has a 20-year sales agreement with the Santos-operated Gladstone LNG project, linked to Japanese oil prices, and is adjacent to CSG fields such as Spring Gully and Lacerta being developed by both GLNG and APLNG near Roma, and just 10km from the Wallumbilla gas hub.
 
Senex considers it a potential low-cost gas production hub, and recently said the EOS Block has exceeded its expectations as it plugged and abandoned legacy wells.
 
It also kicked off the Glenora pilot in November.
 
The project, based around ATPs 767, 795, 889, will involve the drilling of up to 1000 wells over 30 years, staring in the east and moving westward towards the South Australian border.
 
Targeted throughput was 35 terajoules per day.
 
Senex has a number of other gas opportunity in its portfolio, such as the early stage Don Juan CSG project, and numerous Cooper Basin opportunities, and while its early attempts at the Hornet field disappointed, it has high hopes for the Silver Springs unconventional well.