Cooper Energy Earnings Call Highlights Growth Momentum

Cooper Energy Limited ((AU:AEL)) has held its Q2 earnings call. Read on for the main highlights of the call.

Cooper Energy’s latest earnings call struck an upbeat tone, with management emphasizing record production, revenue and underlying EBITDAX alongside a stronger balance sheet and upgraded FY’26 production guidance. While exploration setbacks, higher near-term costs and regulatory spending were acknowledged, the company’s operational momentum, reserve upgrades and progress on the East Coast Supply Project (ECSP) dominated the narrative.

Record financial and operational performance

Cooper Energy reported sales revenue of $141.5 million and underlying EBITDAX of $100.3 million, up 9% versus the prior half, underscoring improving profitability. Adjusted cash from operations rose 5% to $85.6 million, while underlying NPAT surged to $25.7 million from $7.8 million, highlighting a sharp step-up in bottom-line performance.

Upgraded FY’26 production outlook

The company lifted FY’26 group production guidance to 73–77 TJ per day, equivalent to 26.6–28.1 PJ, from the previous 69–74 TJ per day range. Management credited sustained operational outperformance, particularly at the Orbost Gas Processing Plant, as the key driver of the upgraded outlook.

Orbost plant sets new throughput records

Orbost averaged a record 66.3 TJ per day during the half, setting a new 14‑day average record of 70.9 TJ per day and a daily peak of 71 TJ per day. These trials consistently exceeded the former 68 TJ per day nameplate capacity, following a regulatory increase in approved plant throughput.

Reserve upgrades and upside at Sole

The Sole gas field saw a 19% increase in 1P reserves and a 9% increase in 2P reserves, reinforcing the field’s long-term contribution to supply. Ongoing technical work aims to convert more contingent resources, leveraging evidence of strong reservoir deliverability to further underpin future production.

Cost discipline and continuous improvement

Production expenses fell to about $25 million, down 14% on the comparable period, delivering a unit production cost of $1.79 per GJ. A continuous improvement program with more than 80 initiatives is targeting roughly $10 million of additional cash flow benefits this year, while net corporate G&A has been trimmed to $5.2 million.

Strengthened balance sheet and funding flexibility

Cooper Energy closed the half with cash of $81.3 million and net debt reduced to around $34 million, leaving the balance sheet in a solid position. In addition, a $480 million reserve-based loan facility remains fully available, giving the company ample flexibility as ECSP spending ramps up.

ECSP progress and material growth potential

Management reported that the East Coast Supply Project is progressing on schedule and on budget, with drilling at Isabella underway and results expected soon. The project carries approximately 260 Bcf of gross mean unrisked prospective resource plus 65 PJ of gross 2C at Annie and, on success, targets a production plateau above 110 TJ per day and potentially more than 10 years of additional life for Athena.

Improving safety and environmental metrics

The company’s safety record continues to exceed industry benchmarks, with a TRIFR of 3.18 over the 12 months to 31 December, well below the 4.94 benchmark. Cooper Energy reported no recordable injuries, no Tier 1 or 2 process safety events and no reportable environmental incidents, extending a run of more than two years without a lost-time injury.

Tailwinds from higher gas prices

Contracting strategies and increased spot exposure are expected to lift the weighted average contracted gas price by about 20% in the calendar year compared with 2025, when prices averaged above $9 per GJ. Realized gas prices have been trending higher for roughly three and a half years, providing a supportive backdrop for revenue growth.

Cooper Basin recovery and Athena upside

Production in the Cooper Basin showed signs of recovery, with a 21% quarter-on-quarter increase late in the year following prior flooding impacts. At Athena, the average processing rate was 8.2 TJ per day net, and a restart of Casino 4 is planned to add over 1 TJ per day gross, with front-end engineering upgrades completed to support ECSP volumes.

Elanora exploration miss and seismic reassessment

Not all exploration news was positive, as the Elanora well failed to encounter commercial gas in the targeted Waarre A sands. Management is now undertaking detailed seismic and petrophysical analysis to understand the false positive amplitude response and assess any implications for the broader prospect inventory.

Exploration risk and seismic uncertainty

The false amplitude response at Elanora has highlighted additional exploration risk, prompting a quantitative re-evaluation of seismic data across the portfolio. While management notes that many other prospects target different zones, notably the Waarre C sands, investors were alerted that more work is needed to refine success probabilities.

Near-term cost and maintenance headwinds

Despite strong first-half cost reductions, Cooper Energy warned of higher production costs in the second half of FY’26 due to planned maintenance in the CHN fields and a scheduled shutdown at Athena in April. These activities, while necessary for asset reliability, will temporarily push operating costs higher.

Rising project and approval spending

The company expects to spend nearly $20 million on environmental and regulatory approvals related to the ECSP, reflecting the complexity of bringing new gas to market. As capital expenditure rises with development activity, Cooper Energy anticipates drawing on its reserve-based loan facility later this year to fund the next phase of growth.

Oil production dragged by earlier flooding

Oil production in the half was weaker, with volumes affected by flooding in the Cooper Basin in the prior year, which constrained output and reduced contribution to earnings. Management expects oil production to recover in the second half, supporting a more balanced mix alongside gas.

JV timing uncertainty around Nestor

While long-lead items for the Nestor well have been secured, the joint venture has not yet confirmed the drilling slot, leaving final approval and timing unresolved. This uncertainty adds a layer of risk to the pace at which additional ECSP-related upside can be unlocked.

Forward-looking guidance and growth trajectory

Looking ahead, Cooper Energy reaffirmed upgraded FY’26 production guidance of 73–77 TJ per day with cost and capex guidance unchanged, underpinned by record Orbost performance and H1 financial metrics. Management aims to keep Orbost throughput above its former nameplate while driving unit costs below $2 per GJ, expects around a 20% uplift in contracted gas prices, and is steering ECSP toward a potential >110 TJ per day plateau backed by available RBL funding and imminent drilling outcomes.

Cooper Energy’s earnings call portrayed a company in the midst of a strong operational and financial upswing, even as it navigates exploration setbacks and rising project costs. For investors, the key takeaways are the record gas performance, upgraded guidance, strengthening balance sheet and sizeable ECSP-driven growth options, balanced by the need to watch seismic risk, execution timelines and near-term cost inflation.