It certainly helps when a company has a long range visionary strategic plan which is demonstrated to be implemented on time and on budget and one that has great support from its long term shareholders. So much more to come from this company, we as shareholders are lucky to have David and his team who continue to deliver for us not only on current exploration but who also have an eye to future growth. I know it has been spoken that we are on the radar (we are best placed for east coast gas with Mantra to come down the track) but let it not be too soon, I am happy to wait until Sole is up and running (with a substantial cash inflow increase) and we have potentially two new producing wells into the Minerva plant, then the takeover games can seriously begin maybe even by Cooper for future growth.
As I said I believe there is much more to come.
Some Broker comments from last quarterly:
Significant catalysts exist for Cooper Energy as it completes the development of the Sole gas project in Victoria.-
A number of major de-risking opportunities exist over the second half of FY19-Importantly, the Sole project remains on budget-
Macquarie expects the Cooper Basin asset will be sold in 2019.
The share price of Cooper Energy ((COE)) has significantly outperformed its peers, and brokers attribute this to increased interest ahead of the upcoming delivery of the Sole gas project in Gippsland, Victoria.
Morgans highlights market pricing, and the earnings uplift that will be soon delivered at Sole.
The broker envisages large-scale upside is still on offer in the stock, given the added prospectivity in the Otway Basin (South Australia) and future advancement of Manta (Gippsland).
Full year production guidance of 1.4mmboe has been maintained.
Production volumes in the December quarter missed Macquarie's expectations but are expected to recover, given the reversal of downtime at Iona and the reinstatement of the Netherby-1 well in April.
Macquarie believes the company is on track to beat forecasts, while offering a number of major de-risking opportunities over the second half of FY19.
These include Sole, the drilling of Elanora and Annie wells and, further ahead, accessing petroleum rent tax credits from Manta through consolidation with Sole.The company has 119 PJ of uncontracted 2P gas.
New gas contracts are expected to be signed and Canaccord Genuity expects prices to average $9-11/GJ.
The broker lowers second half FY19 oil price forecasts, and long-term forecasts, to US$65/bbl. As a result of lower forecast prices, operating earnings estimates (EBITDAX) are reduced for FY19 to $41m.
The broker has a Buy rating for Cooper Energy with a $0.64 target.If the company can achieve positive outcomes across these catalysts,
Macquarie envisages upside towards $0.75 a share while the downside is protected through the CPI-linked cash flow from the start up of Sole.
Macquarie retains an Outperform rating and $0.55 target.
The Sole development is being quickly de-risked. The project is 86% complete and remaining works are being conducted under fixed-price contracts.
Sole is on track for first gas in July.
Remaining work includes repairing damaged pipe, integrity confirmation, and final connection work on the offshore elements prior to gas flow.
The main risk, brokers concede, is this final development phase. (once this is removed one would expect further share appreciation)
Morgans maintains an Add rating and $0.59 target and points out, importantly, the project remains on budget.
In light of the progress being made, financiers have agreed to revisit the company's borrowing base and mandatory equity requirements. This has resulted in the release of $23m in equity funds for general corporate purposes, along with an $18m increase in the facility.Hence,
Cooper Energy is well-placed to fund the next wave of growth projects.
The first of these will be exploration drilling in the offshore Otway, with wells at Annie and Elanora to be drilled in the June quarter.
Otway
Bringing Minerva-4, the final well for the Otway field, on line along with upgraded water handling capacity has helped bring forward the expected depletion date.
This is important, Macquarie asserts, as it supports the company's plans for the Otway. Planned maintenance at Casino Henry during the December quarter had a larger impact on production compared with broker estimates.
Morgans assumes the Minerva field is depleted by mid year, which would allow Casino Henry to pump gas to the Minerva plant in FY20.
This should help boost Casino Henry margins, while still leaving capacity to add gas from future discoveries. A success case at Annie-1 could also mean a development well as soon as 12 months later, Morgans assesses, given the proximity to existing pipelines at Minerva.
Meanwhile, the larger Elanora-1 target is also likely to attract follow-up drilling.
COE Price at posting:
46.5¢ Sentiment: Buy Disclosure: Held
(20min delay)
