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Cooper Energy posts profit turnaround

Business

UPDATED | Adelaide-based oil and gas company Cooper Energy has turned a loss into a profit in the first half, despite reporting the same level of production as the previous year.

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This morning, Cooper Energy reported net profit of $6.3 million for the six months to December 31, 2019.

That’s up from a $12.6 million loss for the six months to December 31, 2018.

The company produced 0.66 million barrels of oil equivalent (mmboe) in both periods.

So what changed?

The largest portion of the turnaround was a $9.9 million damages payout from energy infrastructure company APA, over a delay to the beginning of oil and gas production at the Orbost Gas Processing Plant, east of Melbourne.

We have been sitting there, waiting with the gas there to flow.

The company also earned $1.4 million from restatement of rehabilitation provisions, as a consequence of a change in the government bond rate.

The Orbost facility will process gas from the offshore Sole Gas Project, which Cooper Energy co-owns with fellow SA-based listed oil and gas producer Santos.

The project was already delayed by early December last year, before bushfires impacted the area.

A statement on APA’s website reads: “Works to complete construction and commissioning of the Orbost Gas Plant continued throughout 2019, however, the bushfires affecting the East Gippsland and the northeast regions over the Christmas and New Year period resulted in the evacuation of project resources from the area until mid-January 2020.”

“The site has been remobilised on the advice of emergency services and the Country Fire Authority, however, air quality in Orbost has further impacted access to site and further delayed site progress during January.”

Cooper Energy reported to the Australian Stock Exchange this morning that there had yet to be any sales from the Sole gas field because of the delay, but that supply was expected to begin next month.

Managing director David Maxwell said the start up of Sole would be the culmination of a five-year effort by the company to bring the field to market.

UPDATE: In an interview with InDaily this afternoon, Maxwell said the liquidated damages paid from APA to Cooper Energy related to the period before the bushfires occurred, and any further damages – to cover the “incidental costs while we sit and wait” for the plant to start up would be accounted for in later filings.

“We have been sitting there waiting with the gas there to flow,” he said.

“Production is deferred, not lost.

“If there’s a bushfire (-related) amount (of damages) … that would be picked up in the next six months.”

Cooper Energy completed its portion of the development of the field in July last year, having spent $347 million on the project.

“Sole has demonstrated out capability in developing and commercialising gas for south-east Australia,” said Maxwell.

“We have more opportunities in our portfolio and our work program for the second half is heavily weighted to advancing new projects and exploration that can bring more gas to market.”

The company also reported a turnaround in cash generation for the first half, reaching $31.4 million, up from the $900,000 loss in the six months to December 31, 2018.

Underlying earnings before interest, tax, depreciation, amortisation and exploration expense (EBITDAX) was up 11 per cent, from $14.7 million $16.3 million.

Cooper Energy was ranked 10th in InDaily’s 2019 SA Business Index – an independent ranking of South Australia’s top 100 companies.

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