Senex bought the WSGP wells online end of October.
As you can see from the P50 curve, the run rate increases over the first 12-18 months before a decline.
So given this was the first major investment in WSGP, its not unreasonable to expect updates.
So far we've been provided with the following updates only:
1. Dec 2017 - Initial flow rates were at 2TJ/day (2 month point on curve). Also we were told there were teething issues
2. April 2018 - Flow rates were at 2.7TJ/day (6 month point on the curve).
Given that Ian Davies explicitly mentioned that the wells were performing in line with P50 expectations earlier in the year, the April result indicates anything but. Further given the teething issues, the least we should expect is confirmation as to whether this P50 curve is being achieved.
Remembering that WSGP is 35% of SXY's asset, it is quite material to value.
If the first phase WSGP wells are not commercial, LET THE MARKET KNOW - at least it will explain why no further drilling has occured despite SXY stating they've located the next 40-50 WSGP wells.
I can only hope that SXY is in compliance with its continuous disclosure requirements in relation to information that is material to price or value and therefore no news indicates that the wells are still commercial.
The share price tells me otherwise - If the WSGP phase one and two wells were commercial and producing in line with expectations, then I doubt we would still be trading at the same price as Dec (around when the market was informed about the teething issues), despite a significantly higher oil price, achieving funding, receiving approvals etc.
Whilst I don't care about the share price (as I will hold until monetisation of assets), I would like to understand the quality of our assets and importantly whether the sub P50 performance was as a result of the actions of the incumbent management team.
If they can't bring WSGP to production, what hope are they of bringing Atlas.
SXY Price at posting:
44.0¢ Sentiment: Hold Disclosure: Held
