The strong ramp-up in gas production in the December quarter has been offset by softer prices. Credit Suisse suspects declining LNG netbacks stemming from weak LNG spot pricing will have limited impact on Senex Energy because of term contracting.
The broker reduces long-term pricing for uncontracted volumes to $8/gigajoule, still well above net back estimates of around $5.50/gigajoule. The broker is “warming” to the stock as the ramp up appears ahead of schedule and the higher-quality Atlas ramp up is coming in the next 18 months.
Neutral rating is maintained as a softening gas price could weigh on sentiment and there are risks still prevailing during the ramp up. Target is $0.37.
Target price is $0.37.Current Price is $0.35. Difference: $0.02 – (brackets indicate current price is over target). If SXY meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).