Cooper Energy poised for growth after a year blunted by gas plant woes

Cooper Energy says it will build on the past year’s record production, achieved despite ongoing third-party gas plant woes putting a dampener on the result.

Cooper Energy managing director David Maxwell.

Cooper Energy had “a year of two halves” with the company looking ahead to better results after a period which was cruelled by production problems at the APA Group-owned Orbost gas plant.

The company experienced ongoing issues with processing gas through APA’s Orbost plant particularly during the first half of the year, which constrained production from its Sole gas field off the Victorian coast.

Managing director David Maxwell said the company’s full year result was “solid, albeit less than we had planned 14 months ago” and the company was “strong and getting stronger’’.

The Adelaide-based energy company posted a net loss of $30.03m, down from an $86.03m loss the previous year, on record revenue of $131.7m, up 69 per cent.

Filtering out exploration costs the company’s underlying EBITDA was $30m, which Cooper expected to increase to $60-$70m in the current full year.

Reflecting an increase in production through Orbost and expected contributions through its own Athena gas plant, which is being upgraded, Cooper expects production to increase by 14-37 per cent in the current financial year to 3-3.6 million barrels of oil equivalent, up from the record 2.63mmboe in FY21.

Managing director David Maxwell said the company’s financial performance last year was “not reflective of future value’’, and all of Cooper’s financial metrics improved significantly in the second half of the year.

“FY21 was a year of two halves, with Orbost reconfiguration works and lower production in the first half and improving Orbost performance and higher sales volume in the second half,’’ he said.

“Initiation of our Sole gas sales agreements was a key milestone for Cooper Energy which delivered a material step-up in revenue and earnings in the second half.

“The second half performance demonstrates the value proposition of Cooper Energy’s asset portfolio and long-established gas strategy.’’

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Mr Maxwell said Cooper had received the maximum liquidated damages available to it under its agreement with APA, which has had issues with foaming and fouling at the Orbost plant, necessitating shutdowns and constraining production rates.

Mr Maxwell said the fundamentals of the company were “strong and getting stronger” and said while it was a matter for the board, dividend payments could be contemplated in the next year or two.

“We’re now earning good margins on our Sole volumes despite the Orbost issues ... and this momentum is continuing into FY22.

“(And) we’re well positioned for continuing sustained growth.’’

Mr Maxwell said there were increasing gas supply shortfalls and increasing prices on the east coast, which put the company in a good position.

“With increasing control and improving the performance of the two gas hubs, and here I’m referring to the hubs at Athena and Orbost, at the same time we are seeing increasing gas supply shortfalls in southeast Australia, and gas prices are increasing.

“We have a range of cost-competitive growth options in the existing portfolio to increase and extend the growth.’’

The company is expecting first commissioning gas through its Athena gas plant near Port Campbell in the first quarter of the year, with upgrade works now more than 80 per cent complete.

“Once operational the Athena Gas Plant will be an integral asset within Cooper Energy’s portfolio and deliver processing rate improvements, cost efficiencies and gas marketing benefits compared with current arrangements,’’ the company said.

Orbost is still producing at less than the nameplate capacity of 68 terajoules per day however, with Cooper saying it had progressed from 23TJ/day in the first half of FY21, to 35TJ/day for the second half and 40TJ/day from July 21.

Further improvement works costing $20m, shared equally between Cooper and APA, would be carried out this year and were designed to “significantly improve plant performance’’.

The company said “despite gas processing shortfalls at Orbost, all Sole customer nominations continue to be met’’ with third party gas purchased to make up any shortfall in contracted amounts.

Ord Minett said it was a “weak” result “with key financial metrics below our forecast and market consensus’’.

Cooper Energy shares were 2.4 per cent lower on Monday at 20c, close to the 12-month low of 19.5c and less than half the level the shares were trading at in December and January.