Senex managing director Ian Davies told a conference call this morning that the company cut 15%, the equivalent of 30 positions of permanent staff, also reducing consultants and contractors, which consisted of 18 actual staff cut as of yesterday, with 12 positions that Senex is not back filling.
"It's regrettable that in times like this these things have to happen," Davies said.
This follows what Davies called a "root-and-branch review" given the paradigm of oil prices as it currently stands.
The South Australian midcap deferred higher risk exploration spend, focusing its program on development and production enhancing activities, reducing its FY15 drilling program and associated expenditure from 26 wells to about 16.
Thus its exploration acreage drilled in the first half of FY15 is underexplored and at an earlier stage of evaluation compared to the drilling program undertaken in FY14, so the drilling results are "within the range of outcomes anticipated by the company", Senex said.
Senex has also implemented annualised savings of $6 million a year across its corporate and operating cost base, along with reducing its FY15 capex guidance from $100-120 million to $85-90 million.
Davies said the right sizing of its spending program, combined with its recently implemented virgin hedging program, would ensure it preserves its "strong funding position" and exit FY15 in a strong net cash position.
Production of 360,000 barrels of oil equivalent puts the company on track to deliver FY15 guidance of 1.4MMboe, while posting lower sales revenue of $28.2 million for the December quarter, down 33.5% on the prior quarter.
Senex's ability to meet FY15 production guidance will be helped by the Martlet-1 exploration success and first gas sales from the Hornet gas field which came online in November, at which the company has booked 153 billion cubic feet of 1C contingent resource.
When asked whether the oil price changed the timeline for the development for fields like Hornet, Davies said that in the Cooper Basin where costs were higher, there was more propensity to defer in short term; but said there would be "no impact at all" on its Western Surat operations in the near term.
Senex also expects to deliver incremental production from Kingston Rule-1 after it's completed in coming weeks.
While the company had no debt and a cash balance of $74.9 million as at December 31, this too was down from $102.5 million in December quarter 2013. Mind you, the average oil price per barrel was $A131 at the time, compared to $81 this time around.
The impact of a lower US dollar Brent oil price, however, was partially offset by a favourable Australian/US dollar exchange rate.
The company will be buffered by hedging instruments put in place last month that secured a floor price of $A68/bbl for 720,000 barrels of oil sales in the second half of FY15.
Senex received $20 million during the quarter from the QGC joint venture to fund the completion of plugging and abandoning activities that were planned but not completed on the western Surat Basin gas permits acquired under last month's asset swap agreement. That uncompleted work will be done over the next three years.
This $20 million was not included in the $85-90 million FY15 capex guidance, Davies said, but was included in the cash balance.
