19-Apr-2021:  Q3 FY21 Quarterly Report

Key features

• Record quarterly production and sales volume: 46% production increase to 0.77 MMboe and 55% sales volume increase to 0.82 MMboe from increasing Sole production
• Record quarterly revenue: 46% increase to $35.9 million from commencement of the Sole Gas Sales Agreements
• Improving performance of the Orbost Gas Processing Plant: 42 TJ/day average processing rate in March 2021, up 63% from the prior quarter*; further increases expected during CY2021
• Extension of Transition Agreement with APA to 1 May 2022: working together to increase processing rate at the Orbost Gas Processing Plant with the objective of achieving nameplate capacity of 68 TJ/day
• Athena Gas Plant Project on schedule and on budget: ~65% complete at quarter-end
• FY21 guidance maintained: Production: 2.7 – 2.9 MMboe; sales volumes: 2.9 – 3.1 MMboe

* Processing rates exclude downtime for reconfiguration works in Q2 FY21.

Comments from Managing Director David Maxwell

“Cooper Energy re-set its baseline performance during the quarter, delivering record quarterly production, sales volume and revenue.

“Improved performance from the reconfigured Orbost Gas Processing Plant underpinned our record results. Daily Orbost processing rates reached 45 TJ/day and stability improved, albeit with periodic absorber cleans still required. Ongoing plant operating improvements and capital works in FY22 have the objective of achieving further production increases and extending cleaning cycles.

“Commencement of the Sole Gas Sales Agreements in December 2020 and January 2021 was a major milestone which contributed to record quarterly performance. Sole sales revenue increased ~200% quarter-on-quarter due to higher sales volumes and less Sole gas sold on the spot market.

“Cooper Energy continues to execute its gas development strategy in a disciplined manner. With improving performance at the Orbost Gas Processing Plant and increasing cash flow, we are well positioned to continue growing gas supply for the southern markets from our Otway and Gippsland basin acreage,” Mr Maxwell said.

[Click on the link at the top for the full report.  I hold COE shares.]

Also, lately:

12-Apr-2021:  Transition Agreement Extension

06-Apr-2021:  COE: Operational and Financial Update

• Increasing Sole cash flows following commencement of Gas Sales Agreements
• Orbost Gas Processing Plant (OGPP) performance improving; production approaching 45 TJ/day average
• Planning capital works with APA with objectives including achieving further production increases
• APA and Cooper Energy working together to improve OGPP’s performance and further increase production with the objective of achieving nameplate capacity of 68 TJ/day
• Sole gas field producing in line with expectations
• Adjustment of debt facility underway
• FY21 Full year guidance maintained:
  • 2.7 to 2.9 MMboe production volume
  • 2.9 to 3.1 MMboe sales volume

Click on the link above to access the full announcement, or open the attached file below.

Disclosure:  I hold COE shares.

24-Mar-2021:  Australian Domestic Gas Outlook Conference Presentation

Also, recently - on 10-Mar-2021:  Developing Gas for Southern Australia presentation at the Euroz Hartleys Institutional Conference

[I hold COE shares.]

15-Feb-2021:  Half Year Results Announcement

Plus:  Half Year Results Presentation   and   Half Yearly Report and Accounts

COE has been doing it tough over the past year, which has little to do with COVID, and everything to do with their issues with getting their Sole gas through the Orbost Gas Processing Plant (OGPP). 

While they have certainly now turned the corner with that issue and are working through both the temporary and permanent fixes for it amicably enough with APA (the operators of the OGPP), they had a rough H1.  Despite that, they're looking to the future, and are accentuating the positives, as you do:

Step-change in production underway

• Record half year production and sales volumes on increased Sole production: Production up 82% to 1.20 MMboe and sales volumes up 86% to 1.21 MMboe (Million Barrels of Oil Equivalent)
• Earnings impacted by Orbost (OGPP) performance: Underlying EBITDAX down 40% to $9.7 million; underlying net loss after tax of $17.4 million (H1 FY20: $2.0 million loss)
• Transition Agreement with APA enabled Sole gas sales agreements to commence: Contracted gas volumes of 19.75 PJ in 2021 delivers step-change in production, revenue and cash flow
• Orbost reconfigured for greater operational flexibility: ~45 TJ/day since February 2021
• Step-change in gas production: Current total gas production rates of ~60 TJ/day, up ~60% on H1 FY21 average daily rate
• Strong growth forecast: FY21 production 2.7 – 2.9 MMboe (FY20: 1.56 MMboe) and sales volume 2.9 – 3.1 MMboe (FY20: 1.54 MMboe)
• Net zero carbon emissions: First domestic oil and gas producer to be carbon neutral
• Growth projects on schedule: Athena Gas Plant >40% complete with first gas expected in Q1 FY22

--- click on the links at the top for more ---

[I hold COE in two of my portfolios, and they are also on my Strawman.com scorecard.  I see them as undervalued by the market based mostly on a temporary setback, so I see upside once they get the gas flowing properly [consistent high volumes, no regular stoppages] through APA's OGPP.  It is in the interests of both parties [COE + APA] to sort this out, and all information I read suggests that they are doing just that, hence the upside once the good news flows along with the gas.]

09-Dec-2020:  COE: Plant works completed - Sole production resumed

Plant works completed; Sole production resumed

• Orbost Gas Processing Plant reconfiguration works completed as planned
• Sole term gas supply to industrial customers commenced

Cooper Energy (ASX: COE) reports the reconfiguration works of the Orbost Gas Processing Plant (OGPP) announced 30 October have been completed as planned and supply under term contracts to industrial customers has commenced. The plant, which is owned and operated by APA Group (ASX: APA), processes gas from Cooper Energy’s Sole gas field.

As previously reported, the OGPP performance has been impaired by unexplained foaming in the absorber section of the sulphur recovery unit. The plant works, which commenced on 14 November involved reconfiguration to enable the plant’s absorbers to operate in parallel, sequentially, or independently and thereby enable higher sustained production rates and greater operational flexibility. The works were completed within schedule. The resumption of operations and production has proceeded in accordance with start-up plans.

The term gas supply contracts with Visy (8 TJ/day) commenced on 1 December as planned with supply sourced from supplementary arrangements in place until Sole production recommenced on 8 December.

Sole production as at 6 am (AEDT) this morning was at a rate equivalent to 25 TJ/day. Volumes in excess of gas supply to Visy will be sold into the spot gas market during December.

The plan is to increase OGPP production rates in a sustainable and controlled manner before the commencement of the remaining term contracts on 1 January. At this point, the total Annual Contract Quantity (ACQ) will be 19.75 PJ per annum (pa) which is equivalent to a daily rate of 54 TJ/day. A minimum offtake of approximately 90% of this figure is provided by take-or-pay obligations.

--- click on the link above for the full announcement ---

[I hold COE shares.]

30-Oct-2020:  Quarterly Activities Report

Key features:

• Quarterly production: up 10% to 0.67 million boe from prior quarter’s 0.61 million boe (barrels of oil equivalent).
• Quarterly revenue: maintained from prior quarter at $24 million.
• Sole: Orbost single absorber trials completed. Commitment to plant reconfiguration works.
• Sole Gas Supply Agreements initiated: to commence from December 2020 and January 2021.
• Athena Gas Plant Project: FID taken and project is 17% complete.
• Carbon neutral in FY20: formal certification underway.

Managing Director’s comments:

“Our results show good progress made against our task list for FY21.

"The August Transition Agreement with APA led to successful single absorber trials, commitment to plant reconfiguration works and preparation for the initiation of the Sole gas supply agreements from December. FID has been taken on the Athena Gas Plant Project, which is now underway and first gas is expected in under 12 month’s time. Our gas production and revenue has continued to grow notwithstanding the lower spot gas prices.

“The achievement of Carbon Neutrality for our operations in FY20 was the culmination of extensive research and engagement with shareholders and carbon offset project providers. We are delighted to achieve carbon neutrality through a high-quality domestic project with long term benefits to a region of major environmental significance. We are now working with the relevant bodies to secure formal certification of this status.

“The coming months are expected to see the pace of activity pick up as Orbost plant works are conducted, then Sole production resumes and we initiate the Sole term gas sales contracts”.

--- click on link above for the full report ---

Also today:  (30-Oct-2020)  COE: Sole GSAs commencement and Orbost plant work commitment

These links are to today's announcements via Cooper Energy's own website:  https://www.cooperenergy.com.au/investor-information/asx-announcements

[I hold COE shares.  They are trading at a decent discount to their peers due to the issues they are having with the Orbost Gas Processing Plant (OGPP) which are addressed in today's announcement.  As I have stated before, the issues are temporary IMO, not structural, and it is in the interests of both APA (the operators of the OGPP and the associated gas transmission pipelines) and COE to get this sorted ASAP.  I view both SXY (Senex Energy) and COE (Cooper Energy) as excellent exposure to increasing Australian east coast and south east coast Natural Gas demand, which should lead to higher prices over time, so I hold both.  I view COE as the bargain stock in the sector due to their current OGPP issues.]

31-Aug-2020:  FY20 Financial Results   and   FY20 Results Investor Presentation   plus   2020 Annual Financial Report (Appendix 4E)   and   2020 Reserves and Resources Statement

FY20 was not a good year for Cooper Energy (COE), however I hold them for their future gas production and supply to SE Australia.  They have issues with the APA-operated Orbost Gas Processing Plant (OGPP) which will hopefully be sorted by the end of this calendar year thanks to the recently announced co-operation agreement between COE & APA.  They do have debt, which is usually a red flag for me, however they also have some quality assets and would make an excellent acquisition target for larger companies, particularly for Beach Energy (BPT), so I hold them because on balance the upside looks significantly better than the downside, particularly as they are currently trading at year lows.  However, it's a medium position for me, not a large one.

I also hold Senex Energy (SXY) and Woodside (WPL), and I recently exited Beach Energy (BPT), having ridden them up from their March/April lows.

COE and SXY are good 2 to 3 year outlook holds in my opinion.  East Coast gas prices are set to rise (due to constrained supply coupled with increased demand) from FY22, and that's when COE and SXY will come into their own, and get positively re-rated by the market hopefully.

COE have a huge gas reserve in the offshore Gippsland Basin (east of Melbourne and just south of Orbost, Victoria), and a smaller but still significant gas reserve in the offshore Otway Basin, SW of Melbourne.  66% of COE's capex in FY21 is going to be spent on developing their Otway Basin Assets.  The Gippsland basin capex has already been spent, they are just waiting for APA to sort out the foaming issues and the suplhur build-up issues at the OGPP, which, as I explain above, could take 3 or 4 months. 

COE are also in an excellent position of having the majority of their future gas production already contracted to large corporate customers such as AGL, Alinta Energy, OI, Energy Australia and Visy.  These contracts are take or pay contracts, which underpins the revenue that COE will receive.  COE's exposure to oil is quite small actually.  The vast majority of their production is now gas, and that percentage is only going to increase further as the OGPP gets sorted out and their Otway basin gas comes online.  I much prefer gas exposure to oil exposure, hence the energy plays that I hold (WPL, COE & SXY) are predominantly gas producers.

20-Aug-2020:  APA and Cooper Energy unite for Orbost completion

This looks positive, because the commissioning issues with the OGPP (Orbost Gas Processing Plant) have been really holding back the COE SP lately, with some analysts suggesting the problems could drag on for many months and cost a lot to fix.  Because APA are the operators of the pipeline and gas processing plant assets, the ball has been firmly in APA's court, and COE were looking frustrated but rather hamstrung as they need this to be resolved ASAP so they can start pulling in that revenue from all of that pre-sold extra Sole natural gas destined for south-east Australia.  Basically, COE have agreed not to sue APA or take legal action against them while they work together to try to rectify the foaming issues at the OGPP.  This makes sense because at the end of the day, COE need the gas to flow, not a long court case (and probable counter claims), and APA are going to remain the operators of the gas transmission assets so COE need to get along with them, despite the recent/current tension.

The market has marked COE down another 2% to 3% today, but I consider this announcement to be positive, in that it allows for a solution/resolution to the gas foaming issues at the OGPP sooner than might otherwise occur.

[I hold COE shares]

23-7-2020:  Quarterly Activities Report

Key features:

• Quarterly production: up 118% to 0.61 million boe vs prior quarter’s 0.28 million boe (barrel of oil equivalent)
• Quarterly revenue: up 61% to $24.1 million from $15.0 million in prior quarter
• Full year production: up 19% to 1.56 million boe from 1.31 million boe
• Full year sales revenue: up 3% to $78.1 million from $75.5 million
• Sole: production rate increased to 40 – 45TJ/ day at quarter’s-end
• FY21 full year production guidance: substantial increase on FY20 anticipated

Managing Director’s comments

“The quarter’s revenue and production results are the highest the company has recorded. A 61% increase in gas revenue, despite the Orbost Gas Processing Plant’s variable processing rates and 21 days offline, gives the first indication of the uplift Sole will deliver to Cooper Energy.

“However, our response is tempered by the fact supply from Sole is lower, and later, than it should be because the plant upgrade is later than planned and commissioning is incomplete.

“We are appreciative of the re-affirmation shown by our customers, shareholders and financiers of Sole’s value as a new source of gas supply for south-east Australia. We are keenly looking forward to further improvements in Sole output through ongoing optimisation of operations at Orbost and other work APA is conducting to take the plant to its nameplate capacity.

“The timing of this will largely determine how large our growth in production, revenue and cash generation proves to be this year.”

--- click on link above for more ---

[I hold COE shares]

20-7-2020:  Minerva Gas Plant Upgrade

$55 million investment to support increased gas supply

• Investment committed for upgrade and connection of the Minerva Gas Plant
• Enables supply of 16 PJ of undeveloped gas and processing new gas discoveries

[I hold COE shares]

19-June-2020:  Sole Orbost Update 19 June 2020

APA have advised COE of some issues with the commissioning of the Orbost Gas Processing Plan which will result in another 6 day shutdown - starting tomorrow or Sunday - and that the plant may need further modification - which could take up to 3 weeks (offline). 

I hold COE shares and I view these issues as temporary, not structural.

22-May-2020:  Sole Gas Project update

• Commissioning of Orbost Gas Processing Plant resumed by APA following shutdown
• Sole supplying gas into Eastern Gas Pipeline
• Stable production at 28 TJ/day after 36 hours operation; to be increased as commissioning proceeds

--- click on link for more ---

Disclosure:  I hold COE shares.

21-May-2020:  https://www.canberratimes.com.au/story/6764214/coalition-energy-roadmap-for-gas-over-coal/

and:  https://www.abc.net.au/news/2020-05-21/federal-government-releases-emissions-technology-roadmap/12269010

and:  https://www.afr.com/politics/federal/gas-not-coal-to-shore-up-solar-wind-energy-20200520-p54umn

That (the federal coalition energy roadmap that wants us to increasingly use gas over coal for electricity production) was big news yesterday (Thursday 21-May-2020), and it will focus more attention onto the energy players in Australia whose revenue is mostly derived from gas sales, not oil sales.  COE is certainly one of these companies.

08-May-2020:  Sole gas project update

21-Apr-2020:  Quarterly Activities Report

Also:  21-Apr-2020:  APA: APA Market Update - Change to Earnings Guidance

31-Mar-2020:  Business Update

11-Mar-2020:  Sole Gas Project update

10-Mar-2020:  Presentation to 2020 Euroz Rottnest Institutional Conference

06-Sep-19:  New gas field discovery at Annie

As expected, that has been a positive catalyst for COE.  They closed up 6% at 62 cents on that news, but traded today as high as 68.5 cents, some 17% above the 58.5c they closed at yesterday.

While the discovery of new commercial gas deposits is always a nice surprise, they were drilling between two currently producing gas fields - so not a total surprise that they found gas there.  

I'm a happy owner of COE - which have good management - and provide excellent exposure to Australian domestic east coast gas demand.

24-Feb-2020:  FY20 First half results and outlook investor presentation

Gas business growth and strong cash flow feature in 1st half

Half Year Financial Report 31 December 2019

Contingent Resource announcement - Annie gas field

I hold COE shares.  Another good result, yet companies are being sold down indiscriminately on coronavirus and global growth fears.  Good opportunity to load up on good companies with bright futures at lower prices IMHO.

18-Feb-2020:  Sole Gas Project update

I hold COE shares.  This is a game-changer for COE.  Not long now!  Good exposure to Australian east coat natural gas demand.  Good management.  Smaller player, becoming bigger. 

Pendal (the old BT / Bankers Trust) became substantial holders of COE shares on Feb 10.  Other current substantial shareholders include Mitsubishi UFJ Financial Group (who bought the Colonial First State Global Asset Management [CFSGAM] business from CBA and have now rebranded it as First Sentier Investors), Greencape Capital, CBA and Challenger (ASX:CGF).  There's some smart money on the register.  Their MD, David Maxwell, owns over 22 million COE shares, and every other board member is also a shareholder, with one (Hector Gordon) owning over 4m shares.  They have skin in the game.

18-August-2019:  https://www.livewiremarkets.com/wires/buy-hold-sell-3-stocks-that-beat-expectations-plus-2-the-market-missed

At the 4 minute mark of that "Buy Hold Sell" segment from Livewire.com, posted two days ago (on August 16), Josh Clark from QVG Capital (QVG stands for Quality, Value & Growth - being the 3 features they look for in an investment) nominates Cooper Energy (COE) as his pick for quality at a discount ("a stock the market missed"), based on companies who have already reported this month.  I've reproduced his commentary below.  His COE bit goes from the 4:00 mark to 4:48.

Josh Clark:  "I think Cooper Energy is probably one that fits that bill. There's not a huge amount in the portfolio that's reported this early into reporting season, but that was a result that came out. Share price didn't move, the earnings were entirely in line with expectations, but the market's overlooking the quality of the business. You've got a business where the majority of the CapEx is behind them. They've just done $34 million of pretax earnings, which should go to a run rate of more like 180 in the next couple of years as they bring their production online.

Commissioning is very low risk and very near term, so that should be sorted out within the next couple of months, and then you're paying eight times pretax cashflow on, or sorry, pretax earnings I should say, on a business that's got a lot of growth options that aren't quite valued in that eight times. I think Cooper's definitely a buy."

Disclosure:  I hold COE shares.

12-Aug-2019:  Cooper Energy FY19 Full Year Results release

Full Year Statutory Accounts

FY19-FY20 Outlook Investor presentation

Disclosure:  I hold COE shares.

10-Feb-2020:  New Casino Henry gas contract with O-I

• Multi-year supply agreement to existing industry gas customer
• 2-year agreement plus 3-year extension option
• Commences 1 January 2021 

Cooper Energy (ASX: COE) announces it has signed a new gas supply agreement with O-I for the supply of 1 PJ per annum for two years commencing 1 January 2021.  

The gas is to be supplied from the company’s equity share of production from its Casino Henry operations.  (Cooper Energy 50% interest and Operator with the balance held by Mitsui E&P Australia and its associated entities). The agreement includes an option for an extension of a further 3 years.

The contract is Cooper Energy’s third gas sales agreement with O-I, an industrial gas user which is Australia’s largest manufacturer of glass container products. O-I committed to the inaugural gas supply agreement for the Sole Gas Project (a life of field agreement for 1 PJ per annum) in 2015 and previously contracted gas supply from Casino Henry for the 2019 calendar year.

Cooper Energy Managing Director David Maxwell said the company was very pleased to have secured an additional agreement with O-I.

“O-I were our first gas customer and we are delighted at the opportunity this contract has presented to deepen our commercial relationship.  It is also the first agreement for supply in 2021 from our offshore Otway operations, where we are investing to build our gas business further” said Mr Maxwell.

Cooper Energy, together with Mitsui, recently acquired the idle Minerva Gas Plant to establish a low-cost gas processing hub for their existing offshore Otway gas production and new discoveries such as Annie.  The plant is expected to receive its first gas from Casino Henry in the first half of calendar 2021.  

The gas sales agreement with O-I provides for flexibility in processing arrangements, and the provision of gas on a firm basis once supply from the Minerva Gas Plant is established.  Prior to that date, processing of gas from Casino Henry will remain at the Iona Gas Plant.

Mr Maxwell said the new contract was consistent with Cooper Energy’s gas contracting strategy.  

“We have chosen to focus our business on supply agreements with utility and blue-chip industrial customers that feature the right combination of price, term and load factor to deliver stable long-term cash flow and efficient production.  This agreement is another example and we look forward to securing additional agreements in 2020”  he said.  

The contracted volume is approximately 17% of Cooper Energy’s share of Casino Henry 2020 gas production of 6 petajoules.  Cooper Energy expects to initiate marketing for other volumes of Casino Henry 2021 gas production prior to 30 June 2020.  

------------------

Disclosure:  I hold COE shares, as well as SXY shares.  I like them for their increasing exposure to Australian east-coast domestic natural gas supply.
 

11-July-2019:  New Sole gas multi-year industrial supply contract with Visy

20 June 2019:  Cooper Energy June 2019 Investor Pack (updated) Presentation

Gives a good overview of the value proposition - of investing in COE.

Disclosure:  I hold COE shares.

17-June-2019:  Sole Pipeline Update

Sole Gas Project Update    

• Pipeline repair and pipeline testing activities complete 

 
Cooper Energy (ASX: COE) advises the offshore activities to undertake the repair and testing of the Sole subsea pipeline have been completed.  
 
The offshore component of the Sole Gas Project is forecast to be within the budget cost of $355 million.   Work on the onshore element of the project by APA to upgrade the Orbost Gas Plant to process gas from Sole is advancing.  APA have advised Cooper Energy that the plant will be ready to receive and process the first Sole gas in the September quarter 2019.  APA and Cooper Energy continue to work closely to ensure the safe and reliable completion of the Sole Gas Project. 

--- ends ---

Disclosure:  I hold COE shares.

05-June-2019:  Gas sales agreements with AGL Energy