Senex Energy Limited (Senex) has entered into a binding agreement with Beach Energy Limited (Beach) to sell its South Australian Cooper Basin assets for $87.5 million cash consideration.

The sale will result in Senex’s exit from the Cooper Basin after more than 20 years, and will support the company’s plans to accelerate the development of its Surat Basin natural gas assets, increasing the supply of natural gas to the east coast to support manufacturing and jobs.

Managing Director and CEO of Senex, Ian Davies, said the sale of Senex’s Cooper Basin assets represents a milestone in the evolution of Senex, and strengthens its position as an important and independent supplier of natural gas to the east coast market.

“The sale of our Cooper Basin assets will strengthen Senex’s balance sheet to accelerate the development of our material Surat Basin natural gas asset position,” he said.

“Senex is uniquely positioned to increase supply of affordable natural gas to the domestic market. Our hub-and-spoke infrastructure operating model is established in the Surat Basin, and we have a diverse portfolio of low-risk, high-return investment opportunities to pursue from our extensive gas reserves position.”

Mr Davies noted that the sale of Senex’s Cooper Basin assets follows a deliberate and considered strategic review of the company’s asset portfolio.

“Beach’s existing operations and experience in the Cooper Basin, including as joint venture partner in our western flank oil assets, means it is ideally placed to acquire these assets and ensure a smooth transition and ongoing stewardship, as well as providing a number of ongoing employment opportunities,” he commented.

Beach Managing Director, Matt Kay, said he was pleased to make the acquisition as it would enable the company to apply its exploration, appraisal and development expertise across a broader footprint.

“From a Beach perspective this was a logical acquisition given our proven track record of extracting value from permits we operate, combined with the fact we are building on our extensive position in the Western Flank across the South Australian Cooper Basin,” Mr Kay said.

The sale is effective from 1 July 2020 with completion expected in early 2021.

The sale is subject to customary conditions, including Senex financier consents and regulatory approvals.

Senex expects final sale proceeds to approximate the book value of assets at completion, with rehabilitation obligations associated with the Cooper Basin assets to transfer on completion.