SXY (ASX) Ann: Senex completes asset portfolio review

Originally posted by majushal ↑

I find this announcement confusing. What constitutes a non-core Cooper Basin asset. Is this code for 'we are no longer drilling for oil'? And if these assets were purchased, isn't the $80m still money pi$$ed up against the wall?. Hardly a ringing endorsement of management.

I have averaged my cost down but boy these blokes test your patience. The millstone around SXYs neck is the natural decline in the oil fields. At the end of the day SXY needs new discoveries - something it has been unable to do. Yes we have a $hitload of gas but will that replace oil field decline? In other words will the profits from gas add to the bottom line or will they largely be offfset by reducing profits from oil field decline. This comes back to my non-core asset question.

Having bought in when the price was in the 70s, I have a somewhat different view of management. For me they are more like spec miner management - mining shareholders pockets to pay their salaries. Of course I suppose had I bought in at 10c I would consider them geniuses - probably not. When I think back over management pronouncements over the years, all I can remember is "we will make money next year...next year will be great..."etc. Unfortunately that message is still the same. Next year. Frankly I think these blokes have been at SXY too long and have grown rich and lazy at shareholders' expense. Bring on a takeover.

I do credit management however for instilling the term "stop-loss" into my investing mentality.

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Ian Davies, CEO
"Prior to joining Senex, Ian was influential in the growth of the CSG-to-LNG industry in Queensland as Queensland Gas Company’s (QGC) Chief Financial Officer. Ian led the negotiation of the LNG joint venture transaction with BG Group and the takeover offer for QGC by BG Group – the largest on-market takeover in Australian corporate history at the time."

Graham Yerbury
"Graham was previously CFO at Macarthur Coal Limited, Site Group International, and coal seam gas producer Arrow Energy"

We have a CEO who led the largest takeover in Australia in its time, and a CFO that was part of Arrow Energy (a 10 x bagger).

I don't normally endorse management, but this team obviously understand what drives value to shareholders (and to prospective acquirers). Their resume alone adds value to SXY.

As mentioned, non-core assets obviously constitute the areas in which we have abandoned wells. These abandoned wells were previously disclosed to the market and it should already be factored into the share price. The fact that SXY have decided to write-off abandoned wells shouldn't really come as a surprise, and this is just the accounting side to this.

I would rather SXY try divest these areas and deploy the capital into the higher yielding Projects.

Providing the flow rates are good (as they should be for SXY to want to materially increase production as announced today), we have just the team that is capable of delivering us a 10x bagger. They just need to do what they've already done before.

Ann: Senex completes asset portfolio review, page-26