Investors in Amplitude Energy Ltd (ASX: AEL) are likely to be pleased with the group's performance so far this year.
Shares in this ASX All Ords energy stock have lifted from $0.20 per share at the beginning of January to $0.25 apiece at the time of writing.
This represents a robust 25% return for shareholders.
For comparison, shares in leading ASX 200 energy stock Woodside Energy Group Ltd (ASX: WDS) are up by about 7% during the same period.
And the All Ordinaries Index (ASX: XAO) has risen by 9.4% since the start of the year.
However, Amplitude shares could have plenty of fuel left in the tank according to Aussie investment firm Macquarie Group Ltd (ASX: MQG).
Let's find out why.
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East Coast gas producer
Amplitude is a Victorian gas producer operating two processing plants.
At Orbost, the company processes gas from its Sole field in the Gippsland Basin, with further upside potential should it recommence production at its Patricia Baleen asset.
The plant connects to the Eastern Gas Pipeline which transports gas into the New South Wales and Victorian markets.
At Athena, the ASX All Ords energy stock processes gas from several fields located in the Otway Basin. This gas is then sold to markets in south-east Australia.
The company also holds numerous exploration permits that could beef up its gas production in the future, should drilling be successful.
More broadly, Amplitude believes that its gas helps to bridge the gap between renewable energy supply and consumer demand for Australia's energy transition.
Or in other words, the Otway and Gippsland Basins could represent strategic sources of gas supply for Australia's domestic market.
And Macquarie has flagged plenty of upside potential for the company following its FY25 results release.
Macquarie's viewpoint
Macquarie has classified Amplitude as its key pick for exposure to gas production in the East Coast of Australia.
In FY25, the company notched up full-year records for production, revenue, underlying operating earnings (EBITDAX), and adjusted cash from operations.
The broker highlighted Orbost's strong performance in FY25, characterised by increased production, declining unit costs, and improved predictability for free cash flow generation.
It also noted Amplitude's focus on expanding output at Orbost by June next year.
Here, the company is aiming to lift gas production by more than 13% compared to FY25.
Macquarie added that the potential Patricia Baleen restart may help boost output, whilst also providing a commercial gas storage facility.
Separately, the broker believes that upcoming exploration drilling in the Otway Basin could be transformative for the ASX All Ords energy stock.
It noted the high probability of drilling commencing at the Leanora/Isabella prospect later in the year, with drilling at the Juliet prospect pencilled in for the second half of 2026.
Macquarie's final verdict
Macquarie has placed an outperform rating on Amplitude shares with a 12-month target of $0.38 per share.
This equates to 52% upside potential from $0.25 per share at the time of writing.
However, the broker also cited a number of key risks that could impact performance for this ASX All Ords energy stock.
These include drilling results from the Otway Basin, gas production rates at Orbost, the prospect of a softer gas pricing environment, and the wider government policy on gas.
