Cooper Energy’s Shares Tumbled On ASX After Providing Update On Sole Pipeline

Cooper Energy

The exploration and production company, Cooper Energy Limited’s (ASX: COE) shares tumbled 1.064 percent following the release of an update regarding the completion of the installation and testing of the Sole pipeline as on 12 November 2018. The company reported that the Company’s contractor has completed the linking of Sole production wells offshore Victoria to the Orbost Gas Plant by laying 65 km pipeline, but the pipeline is unconnected to the gas fields and it is not carrying hydrocarbons. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

The company has been informed by the contractor that, while conducting the acceptance pressure test of the pipeline with water an anomaly was identified due to which the pipeline is not able to hold internal pressure. The contractor has found a through wall thickness opening in the pipeline which has been observed in the pipe itself and not at a weld. The contractor is developing plans to repair the damaged pipeline. However, as per the company’s release, it is expected that the time spent on repairs will not impact the date of first commercial gas sales which is planned for July 2019. The company will publish further information relating to this matter once the repair plans are finalized.

In FY18, the net profit after tax of the company uplifted from a loss of $12.3 million in FY 2017 to a profit of $27.0 million. The total production of the company rose by 54 percent to 1.49 million barrels of oil equivalent (boe) as compared to the corresponding last year. The sales revenue of the company increased by 73% to $67.5 million in FY 2018, due to increased gas volumes and higher oil and gas prices. Further, during FY 2018 the proved and probable reserves of the company increased by 348 percent to 52.4 million barrels of oil equivalent (MMboe).

In the September quarter, the total production of the company increased by 6 percent to 0.37 million boe as compared to the previous quarter. The quarterly revenue of the company increased by 7% on the prior quarter to $21.8 million. The Sales revenue generated in the September quarter was 51 percent higher than the previous corresponding period of $14.4 million due to higher oil and gas prices. At the end of September quarter, the company was having $203.8m of cash which was $236.9m in the June quarter. The Borrowings of the company increased from $125.9m at the beginning of the September quarter to $153.2m at the end, as the debt was drawn down to fund capital expenditure on the Sole Gas Project. The company made cash payments of $74.0m for capital expenditure during the quarter, which was $65.9 million in the June quarter. Capital expenditure incurred in the September quarter was $66.2m, and 99% of it was attributable to the Sole Gas Project.

In the last six months, the share price of the company increased by 30.56 percent as on 9 November 2018, traded at a PE level of 26.110x. COE’s shares traded at $0.465 with a market capitalization of circa $752.51 million as on 12 November 2018.


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