Cooper Energy Announces Report for the Three Months Ended 31 March 2022

Key features
- Record Year to Date production, sales volume and revenue: YTD production up 24% to 2.45 MMboe, sales volume up 45% to 2.93 MMboe and revenue up 71% to $144.6 million
- Quarterly production, sales volume, and revenue: total production up 16% to 0.88 MMboe, sales volume down 8% to 0.91 MMboe and revenue up 4% to $49.2 million
- Increased Orbost Gas Processing Plant rate: 44 TJ/day average processing rate (Q2 FY22: 40 TJ/day)
- 1,089 TJ gas sold into spot market during the quarter
- 252 TJ third party gas purchases - 82% lower than the previous quarter

Comments from Managing Director, David Maxwell

“Cooper Energy continues to build momentum in the March quarter, with another set of strong results.

“The Athena Gas Plant and Casino, Henry and Netherby production was online for the entire quarter post the commissioning works in the prior quarter, with work ongoing to optimise the processing rates.

“The optimisation of processing at the Orbost Gas Processing Plant has resulted in a higher average processing rate. This, together with a reduction in the volume required to be supplied to the Sole long-term customers and a significant reduction in third party gas purchases meant Cooper Energy was a net seller of gas into the higher price spot market” Mr Maxwell said.

Mr Maxwell noted that “discussions are ongoing with APA regarding the long-term arrangements for the Orbost Gas Processing Plant and therefore the Transition Agreement has been extended to 30 June 2022 for Cooper Energy and APA to finalise terms.”

Financial

Sales volume and revenue

From 1 January 2022, new arrangements with AGL commenced that reduced the Sole Maximum Daily Quantity (MDQ) under the Sole term Gas Sales Agreements from 59.7TJ/d to 47.7TJ/d. Consequently, the sales volume of 0.91 MMboe was 8% lower than the prior (December) quarter with significantly lower third-party gas purchases required to support the MDQ. This, together with the improved Orbost Gas Processing Plant production performance, meant Cooper Energy was in a surplus gas supply position relative to the Sole term contracts for the quarter and 1,089 TJ was sold into the higher priced spot market. Although sales volumes were lower than the previous quarter, the sales revenue of $49.2 million was 4% higher. The average realised gas price of $7.91/GJ was 7% higher than the previous quarter, and the average realised oil and condensate price was up 14% to $130.59/boe.

Third-party gas purchases accounted for 8% of total Sole gas sales volume during the quarter (Q2 FY22: 25%). The average purchase price of third-party gas supply for the quarter was $5.36/GJ net of APA contributions.

Short-term gas supply availability and prices remained volatile through the quarter, with Victoria spot prices ranging from $6.00/GJ to $12.76/GJ1 at an average of $9.47/GJ.

The improvement in Orbost Gas Processing Plant performance and lower Sole term contracts MDQ resulted in a net surplus gas supply position for Cooper Energy. The Sole term customer nominations were also lower due to seasonal factors. The chart below illustrates the contrast between FY22 Q3 and FY22 Q2. Note the solid green line is the total for the Sole term customer nominations.

Capital expenditure

Incurred capital expenditure of $3.1 million was 47% lower than the prior quarter, with the Athena Gas Plant cutover and commissioning works completed.

Liquidity

As at 31 March 2022, Cooper Energy had cash reserves of $92.5 million (Q2 FY22: $92.2 million) and drawn debt of $197.0 million (Q2 FY22: $204.0 million).

Material impacts on cash reserves during the quarter included2:

- customer receipts less payments to suppliers of ~$15 million
- quarterly debt principal repayment of $7.0 million and net interest payments (including leases) of $2.3 million
- rehabilitation costs and Petroleum Resource Rent Tax payments of $1.6 million; and
- capital expenditure of $3.6 million

Hedging

The Company currently has no oil hedges in place.

Guidance

The guidance for FY22 remains unchanged and is trending towards the upper range. This will be reviewed in the next month following return to stable operations at the Orbost Gas Processing Plant.

Production

Quarterly oil and gas production of 0.88 MMboe was 16% higher than the prior quarter, mainly due to improved Orbost Gas Processing Plant performance, and the Athena Gas Plant online for the full quarter following the cutover from Iona Gas Plant and recommissioning that occurred in Q2.

Gippsland Basin (Sole)

Sole gas production of 3.9 PJ was 5% higher than the prior quarter. Average production of 43.6 TJ/day compares with 40.1 TJ/day during the prior quarter.

March production was impacted by the Orbost Gas Processing Plant Phase 2B works where the plant was shut down from 25 March. The Orbost Gas Processing Plant was back online on 9 April with some delays experienced due to flooding of the access road to the plant.

The Sole gas field continues to perform in line with expectations.

The Orbost Gas Processing Plant is owned and operated by APA Group (ASX: APA)

Otway Basin (Casino, Henry and Netherby)

With the Athena Gas Plant online for the entire March quarter, Casino, Henry and Netherby (CHN) gas production of 1.3 PJ (COE share) was 66% higher than the prior quarter. Average production of 14 TJ/day compares with 8 TJ/day during the prior quarter. The previous quarter was impacted by the planned downtime associated with the cessation of gas processing at the Iona Gas Plant (owned and operated by Lochard Energy), the pipeline cutover, and commissioning of the Athena Gas Plant.

The Athena Gas Plant and CHN gas fields are owned by Cooper Energy (50% and operator) and Mitsui E&P Australia Pty Ltd (25%) and Peedamullah Petroleum Pty Ltd (25%).

Cooper Basin

Oil production of 29.9 kbbl was 11% lower than the prior quarter, mainly due to natural field decline. Production from PEL 92 contributed 28.8 kbbl (Q2 FY22: 29.9 kbbl) and the Worrior field in PPL 207 contributed 1.1 kbbl (Q2 FY22: 1.2 kbbl).