The share price of Senex Energy Ltd [ASX:SXY], has jumped up 22.2% today thanks to a successful tender.
What happened to Senex Energy Price?
Senex has secured rights to Surat Basin, a Queensland coal seam gas project. The 58 square kilometre area was hotly contested, with 12 other companies fighting for the rights. As the east coast continues to guzzle gas supplies, it is naturally a big win for Senex.
Senex will end up spending about $200 million to get the project up and running. Which includes the drilling of roughly 100 wells. Though it will all be worth it, as it looks set to triple the company’s total annual output.
What now for Senex Energy?
Managing Director and CEO Ian Davies comments (emphasis mine):
‘We plan to engage with domestic gas customers in early 2018 with a view to signing gas supply contracts, with first gas targeted for 2019. This award enables Senex to materially expand its gas business while delivering energy security to domestic customers and opportunities for the local community.’
The crucial part of the deal is just that — the customer. Senex can’t sell any gas to exporters. And while domestic supply is certainly in high demand at the moment, Senex hopes that won’t change in the next year or two.
But with a 22% rise in Senex’s share price, the market is clearly ecstatic with the result. Hopefully, for investors, the good mood lasts.
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Junior Analyst, Money Morning