Cooper Energy (ASX: COE) has entered into a gas supply agreement with O-I Australia (Largest manufacturer of gas packaging products in Australia). As per the agreement between the two companies, Cooper energy is supposed to provide O-I Australia with 3 terajoules gas per day from its share of production from its unit Casino Henry. Under Casino Henry, Cooper Energy is a 50% interest holder as well as the operator. Casino Henry is supposed to supply O-I Australia, 100% gas for the calendar year 2019 and also with Origin Energy which was announced on 20 September 2018.
As per the first supply contract of O-I Australia and Cooper, Casino Henry is supposed to take 1 PJ per annum from the sole gas field for sole gas project. Cooper Energy is going to supply 1 PJ per annum from its sole gas field to O-I Australia beginning from January 2020 till the expiration of the project.
Cooper’s Managing director is confident about Cooper Energy’s capacity to supply gas to its customers from its existing portfolio of assets situated at Otway and Gippsland basin. It is expected that the production from the sole gas field will commence from July 2019. The early commitment of Cooper with O-I Australia in 2015 will support the sole gas project with renew of contract and finance the project. Mr Maxwell also observed that 2019 Casino Henry agreement with regards to the marketing strategies of the company depicted consistency with supply agreements of Cooper with O-I Australia and Origin Energy. Cooper has its business model to supply the gas to buyers in south-east Australia at a competitive price.
Mr. Maxwell is hopeful to get signed further new contracts with diversified list of gas buyers and the contract periods in the second half of the financial year. The agreement with the O-I Australia is a seventh term contract from the portfolio of the gas sales agreement.
Cooper has a very good track record of performance returns over the period of 10 years. For each period within 10 years duration, the company has shown a positive performance report. The 6 months’ performance return shows a value of 54.1%. 1-year report shows a performance of 74.07%. 5 years’ performance has been 56.36%; and for the period of 10 years, the company has performed exceptionally well showing a performance return of 94%. If we see its performance throughout its businesses, the result of 68.87% is seen which clearly shows the company’s objective to keep its shareholders happy and also provide attractive return. The company’s sales revenue has gone up to 73%. The reason being the increase in the gas volume along with higher oil and gas prices. The company has made a statutory profit of $27.0 million including the significant items worth $17.2 million which includes the gain made by sale of the Orbost Gas Plant. For the year ended 30 June 2018, the net profit made by the company is A$27.011 million and the net cash generated from its operating activities was A$ 22.218 million . Total cash flow from the investing activities is A$ 116.923 million. This results in total cash and cash equivalent of the company to circa A$ 236.907 million. The Cooper Energy Limited shows a strong balance sheet with the total asset worth A$ 700.530 million with total liability of A$ 227.749 million showing the company’s strong ability to pay back its long term obligations. The parent entity has made a profit of A$ 22.416 million with total shareholder’s equity worth A$ 450.365 million. As per the chart of the share price we see that towards the end of September 2018, the Bollinger bands represented good momentum after which prices have gone up. Also we see the moving average convergence and divergence line (MACD) is moving above the signal line representing prices to go up. However, the MACD is now trending parallel to signal line. Currently, COE is trading at A$ 0.470 with market cap of A$ 752.51 million with PE ratio of 26.110x.
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