Central Petroleum’s Earnings Call Highlights Robust Growth

Central Petroleum Limited ((AU:CTP)) has held its Q4 earnings call. Read on for the main highlights of the call.

Central Petroleum Limited’s recent earnings call painted a picture of robust operational and financial achievements, marked by a significant profit turnaround and revenue growth. Despite facing challenges such as oil offtake constraints and uncertainties in the long-term gas market, the company’s strategic initiatives and solid financial health position it well for future growth.

Strong Operational and Financial Progress

Central Petroleum has achieved significant milestones, including securing a multiyear gas sales agreement and completing two new production wells ahead of schedule and under budget. Additionally, the company restructured its debt, extending it to 2030, which enhances its financial flexibility.

Impressive Turnaround in Profits

The company reported a statutory profit of $7.7 million, with an underlying profit of $6.5 million, a remarkable improvement from the previous year’s underlying loss of $1.4 million.

Revenue and Margin Growth

Revenues increased by 17% to $43.6 million, with realized prices up by 19%. The underlying EBITDAX rose by 43% to $19.6 million, and gross margins improved by 26%.

Shareholder Returns Initiated

Central Petroleum has commenced its first on-market share buyback program, planning to buy back up to 10% of issued capital over the next 12 months, marking a new chapter in shareholder returns.

Successful Gas Contracting Strategy

The company’s new gas contracts have resulted in more reliable volumes and higher prices, with a 27% increase in second-half average prices.

Record Demand and Production

There was record demand for gas from the Dingo field, and two new Mereenie wells contributed to increased volumes, with oil production up by 14%.

Cost Control and Financial Position

Corporate and administration costs decreased by 39%, and the company reported its highest net cash position in over a decade at $3.9 million.

Reserves Upgrade

Central Petroleum effectively replaced 96% of its FY 2025 production with an upgrade of proved and probable reserves.

Oil Offtake Constraints

Oil offtake was partially constrained in the fourth quarter, which affected gas production, though solutions have been implemented to address this issue.

Seasonal Demand Fluctuations

Seasonal demand fluctuations affected volumes, with a projected 8% lower gas volume in the September quarter compared to June.

Uncertainty in Long-term Gas Market

There is considerable uncertainty in the long-term gas market, particularly regarding production from Blacktip and appraisal results from the Beetaloo.

Challenges in Sub-salt Exploration

Sub-salt exploration activities have been stalled due to joint venture complexities, though plans are in place to resume by mid-2027.

Forward-looking Guidance

Looking ahead, Central Petroleum’s leadership provided extensive guidance on their fiscal performance and strategic direction for 2025. The company aims to maintain momentum through firm gas contracts, cost control, and exploration opportunities, including further drilling at Palm Valley and Mereenie and exploring high-potential prospects like Mount Kitty. They are focused on balancing shareholder returns with long-term growth.

In conclusion, Central Petroleum Limited’s earnings call reflects a positive sentiment with strong operational and financial achievements. The company’s strategic initiatives and financial health position it well for future growth, despite challenges in the oil offtake and long-term gas market uncertainties. Investors can look forward to continued momentum driven by firm gas contracts, cost control, and exploration opportunities.