The Senex Energy Ltd (ASX: SXY) share price is surging this week as gas prices continue to rise both nationally and internationally.
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The Senex Energy Ltd (ASX: SXY) share price is surging this week as gas prices continue to rise both nationally and internationally, partly brought on by cooler than average temperatures throughout the biggest gas consuming economies.
The Senex share price is up 3.1% today, trading at $3.29 per share at the time of writing
Senex is an Australian oil and gas exploration and production company. The company’s geographical segment includes the Surat Basin and Cooper/Eromanga Basins.
It generates most of its revenue from the Cooper/Eromanga Basins segment, which is located mainly in the northeast part of South Australia and extending into southwest Queensland. The company earns its key revenue through oil sales, gas and gas liquids sales.
Australia’s gas debate
Senex has had a strong 12 months, helped by the Australian government’s public focus on utilising Australia’s large gas reserves to spearhead a broader economic recovery from the COVID-19 pandemic.
While gas has become a more publicly palatable energy resource than coal as sentiment moves towards renewable energy, it’s still proved a controversial plan.
ABC’s Four Corners program raised concerns over the plan and the government’s handling of independent research. Meanwhile, a recent Grattan Institute report suggested that the energy resource will “flame out” over time and expanding gas production would be an inefficient investment.
“Gas is likely to play the critical backup role, though not an expanded role,” the report said. “Australia will make a gas-supported transition to a net-zero emissions electricity system – but not a ‘gas-led recovery’ from the COVID recession.”
The government is backing its gas strategy and a spokesman for Energy Minister Angus Taylor says balance will be crucial in the system going forward.
“The government is focused on getting the fundamentals of market design right to encourage investment in the right mix of generation to ensure electricity is available when and where it is needed, at affordable prices,” he told AAP.
Prime Minister Scott Morrison signalled increased government funding for production basins, saying working with large gas producers like Senex will be a key factor in the government’s overall economic plan.
“We’ll work with industry to deliver a gas hub for Australia that will ensure households and businesses enjoy the benefits of our abundant local gas while we hold our position as one of the top global liquefied natural gas (LNG) exporters,” the Prime Minister said.
“This is about making Australia’s gas work for all Australians. Gas is a critical enabler of Australia’s economy.”
The Senex share price
The government began signalling gas as a pillar of Australia’s economic recovery around September last year and the Senex share price has raised by almost 30% since these announcements.
It’s continued to perform strongly of late despite the controversy surrounding the government’s plan. In the past month, the Senex share price has risen by 7.5%, after news that the company had signed a new gas sales agreement with CleanCo Queensland to produce enough gas to power roughly 50,000 homes for a year.
Senex’s performance has been even stronger in the past week, rising over 9.3%. It’s risen 104% over the past 12 months, beating the energy sector by 80%.
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Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.