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Cooper Energy share price on watch as profits slump 150%

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The Cooper Energy Ltd. (ASX: COE) share price is one to watch after the oil and gas producer reported a 150% slump in underlying net profit after tax (NPAT) this morning.

Why is the Cooper Energy share price on watch?

Cooper Energy reported a full-year underlying net loss after tax of $6.6 million for the year ended 30 June 2020 (FY20).

That’s despite production levels climbing 19% higher to 1.56 million barrels of oil equivalent (MMboe) with sales revenue edging 3% higher to $78.1 million.

Underlying earnings before interest, tax, depreciation, amortisation and exploration expense (EBITDAX) fell 14% to $29.6 million. Cooper Energy reported a 611% drop in statutory NPAT, resulting in an $86.0 million loss.

That included a $107.5 million impairment charge announced on 25 August as part of $79.4 million in net significant items after tax.

The Cooper Energy share price is one to watch in early trade following the results announcement. Despite soft earnings, the oil and gas producer reported a 134% surge in cash flow from operations to $48.1 million.

Net debt also increased by 81% to $97.8 million with cash holdings down 20% to $131.6 million.

The coronavirus pandemic sparked an oil price war in March which has put operating margins under pressure. However, Cooper Energy’s gas strong gas revenue helped to offset the $8.7 million decrease in oil revenue for the year.

Prior to this morning’s open, the Cooper Energy share price was down 45.1% for the year. Shares in the oil and gas company closed at $0.34 per share on Friday, having set a new 52-week low of $0.33 in Thursday’s trade.

Outlook

Management is forecasting excess supply in the liquid natural gas (LNG) market for 2020-2021 which will put downward pressure on prices.

However, in the medium term (2022-2023), Cooper Energy sees supply tightening as output declines.

The Cooper Energy share price will be one to watch this morning after also providing guidance for FY21.

The Aussie energy group is forecasting significant exploration and development cuts across its portfolio. Otway capital expenditure is expected to fall from $44.3 million in FY20 to 33-38 million this financial year.

Overall capital expenditure is expected to fall from $76.7 million to $50-58 million in FY21.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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