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Commodities Trading Ideas & Charts

Cooper gas portfolio strategy aims to maximise long-term value while mitigating risks

Investment Thesis

  • Management provides strong FY22 guidance.
  • Sole will result in significant increases in production and free cash flow.
  • Sole’s volumes are mostly contracted out, providing greater certainty at a lower risk of price fluctuations. Sixty-one percent of COE’s 2P reserves (Proved and probable reserves) are undertake-or-pay contracts, with uncontracted gas primarily beginning in 2024.
  • Upside from CEO’s exploration activity Gippsland and Otway Basin.
  • Over 25 years Industry/Developing LNG Project with companies such as BG Group, Woodside petroleum and Santos Ltd which leads by CEO/MD David Maxwell with strong management team.
  • Favorable industry on the east coast gas market – with tight supply could lead to higher gas prices.
  • Recent De- Rating Considered as a Potential Merger & Acquisition activity.

Key Risks

  • Execution Risk – Drilling and exploration risk.
  • Commodity Price Risk – movement in oil & gas price will impact uncontracted volumes.
  • Regulatory Risk – such as changes in tax regimes will adversely impact profitability.
  • M&A Risk – value destructive acquisitions in order to add growth assets.
  • Financial Risk – potentially deeply discounted equity raising to fund operating & exploration activities should debt market tighten up due external macro factors.

FY21 Results Highlights

  • COE achieved record sales and revenue sales volume up +69 percent to 3.01 MMboe and revenue up to +69 percent to $132 million.
  • COE achieved record production of 2.63 MMboe up to +69 percent.
  • COE’s sole gas sales agreement was a significant milestone driving, 2H21 revenue and earnings.
  • Sound balanced sheet maintained with debt adjustments finalized.

Company Profile 

Cooper Energy Ltd (COE) is an oil & gas exploration company focusing on its activities in the Cooper Basin of South Australia. The Company’s exploration portfolio includes six tenements located throughout the Basin. Gas accounts for the major share of the Company’s sale revenue, production and reserves. COE’s portfolio includes: (1) gas production of approximately 7PJ p.a. from the Otway Basin, most of which comes from the Casino Henry gas project which it operates. (2) COE is developing the Sole gas field to supply 24 PJ of gas p.a. from 2019. (3) Oil production of approximately of 0.3 million barrels p.a. from low cost operations in the Cooper Basin. 

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.