Cooper Energy vows to drive production improvements after reporting annual loss

The energy group is laser focused on improving the performance of its newly acquired Orbost gas processing plant after swinging to an annual loss.

Cooper Energy will drive production improvements from its troubled Orbost gas processing facility to capitalise on a looming east coast shortage, the company’s chief executive has vowed, after the Adelaide-based fossil fuel company said annual profits fell nearly $150m.

The group has faced a plethora of problems with its Orbost processing plant on Victoria’s southeast coast and work on its Athena gas plant in western Victoria.

Such were the problems that Cooper Energy has been forced to buy gas on the spot market to send to its customers, sending shares in the gas producer down more than 50 per cent over the last 12 months.

While Cooper Energy reported record annual production, chief executive Jane Norman said the facilities continued to be marred by poor performance periods and unplanned outages and the company is targeting significant improvement over the coming year after completing the purchase of the Orbost from APA Group.

“We now have the opportunity to instil our own values and expertise on site, to drive operational excellence and achieve the performance improvements and resulting incremental cash flow that unlocks future growth for the company,” said Ms Norman.

Increased production, Ms Norman said, will allow the company to capitalise on tight supply conditions across Australia’s east coast.

“Gas will continue to play a critical role in the energy transition, delivering firming power to support the integration of intermittent renewable energy. Gas demand remains strong in Southeast Australia, with the supply-demand gap expected to increase in the coming years.”

Australia is one of the world’s largest exporters of LNG, but gas supplies to the east coast are dwindling and developers are struggling to secure approvals for new projects amid heightened social pressure.

Australia’s competition authority earlier this year said the east coast would have sufficient supplies through 2023, but said it was precarious and weather dependent.

Pressure on Australia’s east coast gas market is only expected to be exacerbated as supplies from traditional sources slow.

ExxonMobil – one of Australia’s largest producers of domestic gas – this year said its Gippsland Basin joint venture, which historically supplies more than 70 per cent of southeast Australia’s domestic gas demand, was rapidly dwindling.

Cooper Energy hopes to fill the void, which it said will drive future profitability, much needed after it swung to an annual loss of $5.6m from a $14.4m profit a year earlier.

The loss was primarily driven by the acquisition of Orbost from APA in a deal valued at between $270m-$330m.

Ms Norman said the price tag included performance incentives, but these were not met during the transition period, and so Cooper Energy will pay $270m for the processing plant.

Ms Norman said a plan to improve the plant has been implemented under a dedicated team and the company expects steady but immediate results.

Orbost is expected to process between 58.5 – 65.2 TJ of gas each day in 2024, an increase on the 59.7TJ a day it was delivering in FY23.

Originally published as Cooper Energy vows to drive production improvements after reporting annual loss