Senex Energy sells Roma North gas facility to Jemena for $50 million, signs tolling agreement

Senex Jemena ASX SXY infrastructure Roma North natural gas processing facility
Under a new $50 million deal, Senex Energy will sell its Roma North gas facility and enter a 21-year gas tolling agreement with existing Project Atlas partner Jemena.

Senex Energy (ASX: SXY) has inked a major deal worth $50 million to sell its Roma North gas processing facility in Queensland to leading Australian energy infrastructure operator and distributor Jemena.

The Brisbane-based oil and gas producer today unveiled the deal, along with an additional long-term gas tolling agreement.

Under the terms of the agreements, Jemena will take ownership of the facility and pipeline after achieving “agreed performance tests”, expected in September 2019.

The company will then process and pipe natural gas from Senex’s developments in the Western Surat Basin to market under the gas tolling arrangement, which has an initial term of 21 years with an option to extend for another 10 years.

Roma North deal

Senex began construction on the Roma North processing facility and pipeline in November 2018.

The project accounts for 260 petajoules (or 42%) of Senex’s total 615PJ of proved and probable Surat Basin reserves.

Jemena will pay a $50 cash consideration for the asset, with Senex to then pay a capacity-based tariff to Jemena under the tolling agreement.

Senex Energy Roma North Western Surat gas reserves

The deal secures an initial processing capacity of about 6PJ per year, or 16 terajoules per day, with provision for a low-cost expansion to 9PJ/year at Senex’s option.

The agreement terms also provide for further processing capacity expansion up to the designated site capacity of about 18PJ/year (48TJ/day).

Surat Basin partners

Senex is already partnered with Jemena on another Western Surat natural gas development, Project Atlas, since June 2018.

Under this agreement, Jemena is building a gas processing facility and pipeline to link to the existing Darling Downs pipeline, which runs to the Wallumbilla hub. Commissioning of the Project Atlas facilities is anticipated by the end of 2019.

Upon completion of the latest deal, Jemena will own and operate both gas processing facilities at Project Atlas and Roma North.

Senex said the sale proceeds would support the continued development of its Surat Basin gas developments and other growth projects.

“With low-cost expansion options designed into the facility and very competitive long-term tariff arrangements, this transaction will accelerate efficient recovery of Senex’s material gas reserves from Roma North and the broader Western Surat acreage,” Senex chief executive officer and managing director Ian Davies said.

“Together, Senex and Jemena continue to deliver innovative and flexible solutions to bring more gas to the east coast market at prices that make sense for both producers and customers,” he added.

O-I Australia gas supply deal

Last week, Senex announced its third domestic gas contract for Project Atlas, inking a deal with glass-packaging manufacturer O-I Australia.

Under a five-year agreement, Senex will supply O-I, which manufactures and supplies glass bottles to some of Australia’s biggest breweries and beverage suppliers, with 1PJ/year of gas from January 2021.

The deal also provides O-I the option to increase the total contract volume by an additional 1.1PJ/year after January 2022 (for up to 5.5PJ in total over the five-year contract).

According to Mr Davies, the deal boosts the total volume of Project Atlas gas under contract to over 23PJ.

“With first gas from Project Atlas planned for late 2019, Senex expects to write additional new gas contracts with a range of gas buyers in the coming months,” he said.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.