Cooper Energy Ltd. (ASX: COE) shares have fallen lower in morning trade. At the time of writing, the Cooper Energy share price is trading 1.35% lower at 36.5 cents after the company released an update on its Sole Gas Sales Agreements (GSAs) this morning.
What did the company report?
The Cooper Energy share price is edging lower despite the company confirming its remaining Sole GSAs will commence on 1 January. Cooper Energy reported its long-term GSAs with industrial and utility clients in 2021 total 19.75 petajoules (PJ) in annual contract quantity. Its take-or-pay obligations represent a minimum quantity of roughly 90% of the total annual contracted volume.
The company said most Sole gas will now sell for the agreed term contract prices. Before the commencement of these remaining GSAs, Sole gas was selling for lower spot prices, less transportation costs. Cooper Energy and APA Group (ASX: APA) were sharing the revenue and costs, in accordance with their transition agreement.
APA Group operates the Orbost Gas Processing Plant, where Sole gas is processed. Performance at the plant has been hindered due to foaming of the sulphur recovery unit’s absorbers. Earlier this month, the company reported reconfiguration of the plant’s two absorbers, enabling them to operate independently, was complete. It is still analysing the root cause of the foaming issues.
Cooper Energy said it has backup gas supply arrangements in place to ensure supply to the GSAs.
Commenting on the progress, Cooper Energy managing director David Maxwell said:
The commencement of the Sole GSAs is a significant milestone which will deliver a material step-change in production, revenue, cash flow and earnings. We are pleased to be increasing gas supply to our utility and industrial customers and providing a competitive new source of natural gas to the domestic market. We are grateful for the strong support shown by our customers during what has been a longer than expected commissioning phase for the Orbost Gas Processing Plant.
Cooper Energy share price and company snapshot
Cooper Energy is an energy exploration and production company. It generates revenue from gas supply to south-east Australia as well as the production of low-cost Cooper Basin oil.
It’s been a difficult year for the company’s shareholders, who watched the Cooper Energy share price drop 41% in the wider COVID-19 market selloff earlier this year. And with the company reporting a 150% decline in underlying net profit after tax (NPAT) for the full 2020 financial year, the rest of the year wasn’t much better.
Year to date, the Cooper Energy share price is down 39%.
By comparison the All Ordinaries Index (ASX: XAO) is up 1.4% in 2020.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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