Senex announces strategic relationship with EIG and capital raising

On Feb 1, 2017

Senex Energy Limited (ASX:SXY, “Senex”) announces that specialist energy investor EIG Global Energy Partners (“EIG”) will become a substantial shareholder, with Senex and EIG to work together to establish a funding model to accelerate development of the Company’s flagship Western Surat Gas Project.

Key points:

Senex has conducted a raising of approximately A$55 million via a placement to certain EIGmanaged funds and other institutional investors at a subscription price of A$0.315 per share
Senex is offering eligible shareholders the ability to participate in a Share Purchase Plan, to be capped at A$40 million
Senex and EIG to work together to develop an appropriate funding model for the Western Surat Gas Project and other growth projects within Senex’s portfolio, including EIG participation in such funding
EIG development funding of up to US$300 million for Western Surat Gas Project acceleration1
EIG currently holds approximately 2.7% of Senex issued capital following on-market purchases. EIG will hold approximately 12% of the expanded Senex issued capital following completion of the Institutional Placement and Share Purchase Plan2

Senex Managing Director and CEO Ian Davies said that the transactions would provide Senex the strength and momentum to develop and expand its significant upstream positions in both the Surat and Cooper Basins, to address substantial opportunities in the east coast gas market.1 2

“We know the Western Surat Gas Project is a great asset, given our understanding of the subsurface and our ability to operate safely and at low cost. EIG is a respected global energy investor and their support shows they also see the opportunity for Senex to build a significant east coast gas business,” he said.

EIG Chief Executive Officer R. Blair Thomas said, “The Western Surat Gas Project is in prime position to supply gas into the structurally short east coast gas market. EIG has been an early investor in coal seam gas in Queensland since the late 1990’s, and we believe now is the opportune time to develop these assets as fundamentals are supportive. Senex has the right people to develop the project and in long-term partnership with EIG we believe the Company will build a tier-one asset.”

Senex Chairman Trevor Bourne said, “The Senex Board welcomes EIG to our register. As a leading global investor in energy projects and infrastructure, EIG has a 35-year track record of investing in the energy sector. In due course, we look forward to having a representative of EIG join the Senex Board3. Establishing a long term relationship between Senex and EIG will greatly facilitate the implementation of our growth strategy when coupled with the quality of our people and assets.”

Senex today announced it has conducted a successful raising of approximately A$55 million via a placement to EIG and other institutional and sophisticated investors at a subscription price of A$0.315 per share (“Institutional Placement”). Part of the EIG placement is subject to Foreign Investment Review Board (“FIRB”) approval. The Institutional Placement will be followed by an offer to all eligible shareholders to participate in a Share Purchase Plan (“SPP”). The SPP is capped at A$40 million.

Senex Managing Director and CEO Ian Davies said, “We have received strong endorsement for these transactions from our existing institutional shareholder base, reflected in the substantial take-up of the offer alongside EIG.”

The proceeds from the Institutional Placement and SPP will be used as follows:

To progress and accelerate development of the Western Surat Gas Project, maximising the value of Senex’s material gas reserves in the Surat Basin;
To exploit Senex’s large acreage position in the Cooper Basin to support building a material gas business and increasing oil production; and
To actively pursue growth opportunities to deliver gas into the undersupplied east coast gas market.

In summary, the arrangements announced today will provide whole of business funding to strengthen the balance sheet and give Senex the financial flexibility to actively progress high quality growth projects, including the Western Surat Gas Project.