Senex Says Shale Gas Prospects Have Attracted ‘Global’ Interest
Senex Energy Ltd., exploring for shale gas in central Australia, said it has held initial talks with international energy producers interested in a potential partnership to help develop its prospects.
“They’re global players, some of the biggest energy companies in the world,” Ian Davies, managing director of the Brisbane-based company, said in a phone interview, declining to identify the companies. “It’s very preliminary discussions around a potential material opportunity.”
Senex, formerly Victoria Petroleum NL, aims to drill three wells in the Cooper Basin by the end of the year, targeting gas in shale and coal deposits, Davies said today. The drilling, expected to cost about A$14 million ($15 million) and subject to the availability of rigs, is part of a 14-well exploration and development campaign the company plans to carry out in the basin during the year ending in June 2012, he said.
ConocoPhillips (COP), BG Group Plc (BG/) and Hess Corp. (HES) plan to fund shale gas exploration with partners in Australia under agreements announced last month. With almost 400 trillion cubic feet of estimated shale gas resources that may be recoverable, Australia has “major” shale potential in four areas including the Cooper Basin, the U.S. Energy Information Administration said in April.
“At some point, we’ll have to” find a shale gas partner, said Davies, the former chief financial officer of Queensland Gas Co., an Australian company acquired by BG Group in 2008. “Certainly not before next year. My own view is that we’ve got more value to add for shareholders by doing these three wells and taking that risk ourselves. We’ve got the funds for it.”
Senex, about 8 percent owned by the BG unit, renamed QGC, has climbed 22 percent this year in Sydney, compared with a 6.5 percent drop in the S&P/ASX 200 Index. The shares rose 1 percent to 50 Australian cents a share at 1:16 p.m. Sydney time.
The company’s Vintage Crop-1 well tested the Roseneath and Murteree formations for shale gas in the latest quarter and the initial results “significantly exceeded expectations,” Senex said in a July 29 statement. Senex had about A$42 million of cash at the end of June, according to the statement.
“There’s no doubt that the shale gas option within Senex is a potential sleeper asset,” Andrew Williams, a Melbourne- based oil and gas analyst at RBC Capital Markets, said by phone. “But ultimately, it will come down to what gas price is needed to make it economic. The shale gas concept in Australia is still so much in its infancy. There are still a lot of unknowns.”
Beach Energy Ltd. (BPT) has said it plans to secure a partner to develop its shale gas assets in the Cooper Basin. AWE Ltd. (AWE) plans to carry out more work on its shale gas acreage in the Perth Basin of Western Australia before signing a partner, Bruce Clement, the explorer’s managing director, said last month.
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