Oz Senex Expects A$52mn Impairment
Sydney-listed Senex Energy August 12 announced it expects to recognise a non-cash impairment charge of approximately A$52mn (US$37mn) during the 12 months to June 30 (FY2020).
“The non-cash impairment charge is in respect of Senex’s Cooper Basin oil assets and is due to a material downward revision in oil price assumptions resulting from the effects of the Covid-19 pandemic on energy market fundamentals,” the company said.
Senex has reduced its long-term Brent oil price assumption to US$62.50/b from FY2025 and is forecasting a slower recovery to these levels over the short to medium-term. In addition, following an organisational review as a result of the Covid-19 pandemic and the changed economic outlook, Senex expects to book a restructuring cost provision of approximately A$2.6mn in its FY2020 full year results, which will be announced on August 24.
“Senex’s transition to a diversified oil and gas producer is now complete. We are now much less reliant on oil prices, we have material acceleration and expansion growth opportunities within our existing gas portfolio, and our valuable western flank oil business continues to generate free cashflow with exploration and appraisal upside to pursue,” CEO Ian Davis said.
The expected impairment is non-cash in nature and does not affect Senex’s oil and gas reserves position, financing arrangements or underlying financial strength, the company said.