Ann: Guidance update, page-12

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Cooper Energy gets earnings boost from gas crunch

Cooper Energy has lifted its earnings guidance by more than 7 per cent as it profits from soaring domestic gas prices amid a global energy crunch that threatens to stoke household and business bills in the coming months.

Cooper Energy said it now expects earnings for the 2022 financial year to be between $57 million and $68 million, up from its earlier estimate of $53 million to $63 million.

The profit revision sent shares up nearly 4 per cent by mid-afternoon against a flat broader market.
Much of the increased revision was driven by stronger returns, but Cooper Energy said it was on course to beat its previous production estimate after the operations of the troubled Orbost Gas Processing Plant was improved.

The junior oil and gas miner lifted its bottom-end production forecast range by more than 6 per cent, hinting that APA – which owns and operates Orbost that Cooper Energy relies on – has smoothed production issues that have plagued the Orbost gas processing plant.

Orbost has in the past failed to reach nameplate capacity, which has thwarted Cooper Energy’s production targets, forcing the Adelaide-based company to fulfil contracts with gas bought on market rather than from its flagship project in the eastern part of the Gippsland Basin.

The plant in 2020 could only produce 42 terajoules of gas, falling short of APA’s 68TJ contractual obligations, which include a clause requiring APA to compensate Cooper for costs related to sourcing gas to fill the production gap and supply existing Sole gas customers.

The Orbost plant was shut down in March to install a new component, while APA has also been working on refining its chemical inputs. A source familiar with the details said both APA and Cooper Energy were optimistic the changes would deliver long-term production benefits.