Gas guru stays ahead of the game, page-25

From Livewire:

Cooper Energy’s earnings set to explode

Cooper Energy (ASX:COE) is a local gas producer in the final stages of the development of ‘Sole’, a gas field 65km off the Victorian coast. Sole is about 86% complete and on budget, and is forecast to lift EBITDA from $33 million in 2018 to over $200 million by June 2020. Not bad at all for a company with an enterprise value of $580 million.

About 75% of their gas has been pre-sold to blue chip clients like Alinta, AGL and Energy Australia. Government policies restricting exploration and outwards-facing export terminals have led to something of a gas shortage in Australia and steadily higher prices. Sole will be the first new East coast gas supply in over three years, so the prospects for their uncontracted gas appear strong.

Further long-term upside would come with the approval of the firm’s ‘Manta’ project, which would increase production in 2024 by an additional ~30%. Already profitable on existing production, the completion of Sole would give Cooper Energy the cash flow and balance sheet to pursue further transformational opportunities.

This is what we look for in our commodity investments: profitable production that can be used to finance larger, high quality projects with the potential to dramatically increase value.

Timing is propitious, as the firm exits a period of intense investment. By 2020 the firm will have invested over $600 million in the Sole project and associated production facilities, and provided there’s no last minute execution mishap, shareholders will soon reap the rewards.