A very strong set of 1H results released this morning for Amplitude Energy (AEL).

Production & Financial Momentum

Can see the excellent improvement in operations and financial profitability AEL has made over recent years since Jane took over from the previous CEO & her team got on top of the historical Sulphur & fouling issues at the Orbost gas plant they acquired from APA several years back.

I have drawn in estimated full-year FY26 outcomes based on current half’s production. Note this doesn’t include any upside likely from 20% increase in pricing flagged on number of Sole GSA contracts due to kick in from 1^st Jan 2026.

Balance Sheet:

Can see the significant inroads they’ve made from the historical debt for purchasing the Orbost gas plant from APA several years ago (c$460M by memory), and the major decommissioning liability (old BMG field) they had to fund this past 1-2 years out of operating cashflow ($200M+). Have had a little help on this front also from their recent capital late last year (done at $2.695 to help supersize their exploration program & add in a 5^th well “Nestor” with their Otway 50% business partner OG Energy).

Orbost (Sole Gas Field) Production Performance

Clear momentum as they have successfully gotten on top of the historical sulphur & fouling issues that plagued the plant under APA’s ownership & AEL’s early ownership.

They have already had the plant producing above its 68 TJ/day nameplate capacity (recent record of 71 TJ/day), and are looking at low-cost options to potentially increase Orbost’s production capacity higher.

Realised Gas Pricing steadily increasing with inflation & SE Australia market demand

They are also making extra margin on their increased spot gas sales through catering for additional peak demand periods & through partnerships with VIC gas peaker plants to assist with VIC’s intermittent power generation issues from high renewables (especially wind).

Growth Plans

The East Coast Supply Project (ECSP) is their major growth initiative, designed to backfill the substantial latent capacity available at their other major gas plant (Otway) of c130-135TJ/day (currently only processing 15-20TJ/day).

They own this plant outright – and with declining production from existing fields - getting additional gas volumes through the plant is the obvious high-value & low-risk growth option available for Amplitude.

The project stalled under historical 50% joint-ownership with Mitsui (didn’t have the desire to commit capital / risk appetite to proceed) in recent years. Mitsui finally sold their 50% interest in the offshore Otway fields to a new JV partner OG Energy, who after significant due diligence were keen to proceed & took over Mitsui’s interest. As part of this they also agreed to repay/match Amplitude’s cap-ex on the project to date with a free carry ($28M), after which time both parties share costs equally (recent exploration is still being funded under this carry arrangement).

Potential Re-Rate Catalysts

I think lot of analysts & investors were blind-sided by the first well of their big ECSP growth project (Eleanora) coming up a dud. Market reaction was savage (likely suddenly questioning the likelihood of success in the other 3-4 main exploration wells) which had been partly factored in as their major new growth engine.

The ECSP’s next exploration well results (Isabella) are due within days (likely to drop within the next 3-7 days). Given how soon they’ll have this input into their models (and having recently been burned) – I suspect some analysts may await this news, before updating their models & making any bold new calls / price targets (hence potential window of opportunity!).

Second half of year (July-Dec 2026) will see the other 3 exploration wells tapped. If successful, this is likely to de-risk Amplitude’s growth prospects considerably, and result in a material positive re-rating for AEL.

Rest of business is absolutely humming – with increased gas pricing on lot of their contracts from 1^st Jan 2026 – so expecting 2H FY26 to be very strong.

Given ongoing strong performance from their core Sole gas field, may also see another reserves upgrade for it (basically extending its production life) in 2H FY26, which Jane has flagged as a possibility. Would also be well received.

Core business is going great – really for the market I think it’s just laser focused on Amplitude’s future growth project (ECSP) being de-risked and proved up. Once that happens – and depending on the number of successful exploration wells - I think we could easily see a SP 50% above its current levels.

Near Term Price Target: (partly dependant on imminent success with Isabella): $2.50-$2.80

Upon further Exploration success in 2H of CY2026 (other 3 wells): Easily see $3.30-$3.60.

Downside (assuming all ECSP wells fail): $1.80-$2.00 (underpinned by existing very profitable business & reserves). Would also have fallback position of either further exploration (require additional cap-ex) or simply 3^rd party gas tolling through Otway (low-risk but not as profitable) for Beach or others looking to bring online new fields in the area.

Not without risk – but risk-weighted rewards skewed firmly in favour of upside IMO.

Disclosure: Held in SM & IRL portfolio.

Interesting opportunity thrown up today.

Amplitude Energy (AEL, formerly Cooper Energy COE) has had a miss in its first exploration well of the current 4-well campaign in the Otway basin (offshore Victoria).

While disappointing & quite unexpected, I think the market has over-reacted & SP over-corrected - cratering over 20% on the miss.

Core business is doing very well under relatively new manager Jane Noorman (ex STO)'s stewardship, with increasingly pleasing performance from their owned Orbost Gas Plant feeding Sole gas field production through it - formerly was bottlenecked & sulphur issues, but in past 12-18 months they have gotten on top of this issues, debottle-necked the plant & are even now lifting its capacity beyond former nameplate capacity of 68 TJ/day.

Other owned Gas Plant (Orbost) has huge latent capacity (total 150 TJ/day), which is only very partly being utilised. This is the big value kicker if they can backfill this plant with additional gas volumes from current growth initiative & exploration program dubbed the ECSP (East Coast Supply Project). Potential of substantial additional cashflow through the plant, for only the additional cap-ex to get any new fields drilled & tapped into existing nearby pipeline infrastructure.

I think market has over-reacted, and still good chance that 1 or more of the other 3 wells planned to be drilled with current JV partner OP Energy will come good.

Possible opportunity for those with slightly higher risk tolerance, as rest of business has been substantially de-risked - its just the growth premium that's been knocked off assuming entire campaign will be a flop. I don't buy this simplistic narrative & put this at a low probability. Any buying sub $2.75 good value in my opinion & will be rewarded with time.

Growth volumes from ECSP will kick in by early 2028 if successful, and can always toll 3rd party gas through Otway plant as a fall back.

Also my belief is eventually Beach will make a move on Ampllitude, as would complement their predominantly West Coast gas business nicely, and they already have significant expertise in Amplitude's offshore Victorian acreage/area, and could bring their own additional gas volumes through the plants - which they woudl pick up for well below replacement cost.

Good buying at these levels I believe, with multiple re-rate catalysts on horizon - assuming at least one or more of new wells come good.

For anyone interested in the company - a short presentation by the CEO Jane Norman on Tuesday this week done through the "ASX CEO Connect" series.

Provides a great 20 minute overview of the company, where it's at, recent history/challenges overcome, plus prospects, catalysts and growth opportunities going forwards.

ASX CEO Connect March 2025 | Amplitude Energy (ASX: AEL)

The current free cash flow generation figure was particularly impressive (clear numbers now Orbost plant issues mostly resolved & post BMG-decommissioning works), and the ECSP major growth project targeted for drilling starting later this year will be able to be readily joined into the company's existing infrastructure (existing seabed pipeline T's & processed through the company's Athena Gas Plant which has massive spare capacity to be backfilled).

Really positive on Amplitude going forwards, after what was a disappointing & tough few years for shareholders with the Orbost Plant / Sole gas field issues. Onwards & upwards!

Very strong rest of half-yearly results from Amplitude Energy (AEL - formerly Cooper Energy COE) this morning.

Just hopped off the half-yearly results webinar & analyst Q&A.

The reasonably new CEO Jane Norman & her team - are finally showing really tangible results of getting on top of a lot of the things that have been holding the company back for some years, most importantly of all the Orbost production issues (from Sole gas field) & plant bottlenecks/technical issues. The dramatically improved cashflow generation is really starting to show through in spades, and they should be able to make pretty short work of deleveraging their debt facility in coming periods, following having to draw heavily on their debt facility this past 12 months to carry out the BMG decommissioning works (major liability that has been weighing heavily on the company & its balance sheet - all works have now been completed & paid for, removing major impediment/risk for investor community).

Other big exciting news was looking very likely that OG Energy will imminently finalise agreement with Amplitude's long-term 50% JV partner Mitsui in the Otway Basin (Otway Basin gas fields & major Athena Gas Plant). This will likely now clear the way for Amplitude's long-envisioned & pursued major growth project ECSP (East Coast Supply Project) to move forwards, and much more likely now with the preferred 3 well program with a fully aligned, financial & motivated JV partner).

I think the Analysts who have long followed this long-term underperformer were likewise impressed, and I see pretty much all the pieces in place now for a steady positive SP re-rate, and steady closing of the valuation gap between their assets (2 major gas plants + multiple gas fields right by the SE Australian market which faces serious shortfalls in coming years due to years of VIC government virtue signalling over common sense).

Very positive on this one.