Amplitude Energy Limited

The Business

Amplitude produces gas from two operated hubs in Bass Strait and the Otway Basin, feeding the Orbost Gas Processing Plant (wholly owned) and the Athena Gas Plant (50% owned), both connected directly into Victoria's gas market. The Sole and Otway fields underpin roughly 88% of current output. What differentiates Amplitude from peers such as Beach Energy or Cooper Energy is infrastructure ownership: it controls processing capacity in a supply-constrained market, a cost base competitors without owned plant cannot replicate. The East Coast Supply Project, a brownfield expansion using existing plant, is the next leg of growth.

Recent Performance

Amplitude delivered a record FY26, with revenue up 7.0% to $286m off a base that itself grew strongly the year before, and EBITDAX margin peaking at 67% on the back of plant debottlenecking that halved unit operating costs over three years. The market has re-rated the stock ahead of the Juliet exploration well and the East Coast Supply Project's investment decision, both due this quarter, and the current price leaves limited margin for error should either disappoint.

Outlook

The next three years pit two forces against each other. Base production at Sole and Otway declines naturally, while capital expenditure on the East Coast Supply Project peaks across FY27 and FY28, pushing free cash flow into negative territory before it turns positive again once new volumes arrive in FY29. EBITDAX margin is expected to compress from its FY26 peak as new royalties and corporate costs rise. Revenue is expected to peak around FY29 as new project volumes ramp, then ease back the following year as natural field depletion outpaces replacement.

Our Valuation

Our fair value estimate draws on four independent valuation approaches, weighted most heavily toward a probability-weighted discounted cash flow given the company's finite reserve life. The methods converge within a reasonably tight band, which supports confidence in the estimate, though the treatment of the rehabilitation liability is the single largest swing factor separating them.

Key Risks

The rehabilitation provision, equivalent to a large share of the company's current equity base, raises a genuine question about how such liabilities should be treated in valuing the business, and different conventions produce materially different conclusions. A dry result at the imminent Juliet exploration well would remove the growth case built around the East Coast Supply Project, a risk that is not hypothetical given two wells in the current campaign have already failed. Gas prices are currently sitting at a five-year high, and global benchmark pricing suggests the current level may not hold indefinitely, which introduces cyclicality risk to future margins even with most volumes under contract.

What to Watch

The thesis-defining event is the Juliet exploration well result, expected in the September to November 2026 quarter, which will confirm or eliminate the growth case built around the East Coast Supply Project.

• Q1 FY27 Juliet well result — a binary outcome that will confirm or remove the growth case underpinning the East Coast Supply Project.
• Q1 FY27 ECSP final investment decision — confirms capital commitment and project timeline.
• H1 FY27 Domestic gas reservation policy outcome — a price cap on domestic gas sales would pressure realised pricing and margins.

Company Description

Amplitude Energy is a domestic gas producer supplying Victoria's east coast market from two operated basins. The Sole field, processed through the wholly owned Orbost Gas Processing Plant, and the Otway Basin's Casino, Henry and Netherby fields, processed through the 50%-owned Athena Gas Plant, together account for roughly 88% of current production of 27.6 petajoule-equivalents. A residual Cooper Basin oil interest contributes a small, declining volume. The East Coast Supply Project layers new development wells (Annie, Artisan) and exploration targets (Juliet, Nestor) onto the existing Athena plant, avoiding the cost of building new processing infrastructure. Roughly 80% of gas volumes are sold under contracted, CPI-indexed agreements to six major industrial and retail customers.

Where the Growth Is

The East Coast Supply Project is the whole growth story. It contributes nothing to revenue today but is expected to ramp to roughly 25% of output by FY30, using existing plant capacity rather than new-build infrastructure. Two foundation gas sale agreements (8.75 petajoules a year) are already signed, ahead of first gas targeted for mid-CY2028. If every well delivers, the project roughly doubles group EBITDAX. The offsetting reality: the Elanora and Isabella wells already failed, costing a $106m write-off, evidence that this pipeline carries genuine binary risk rather than being a formality ahead of development.

Competitive Position

Amplitude's advantage is physical, not financial: it owns the only gas processing infrastructure of scale connected to its fields, and no competitor can feasibly build equivalent plant within five years given approval timelines and capital costs. This delivers unit operating costs around 44% below the peer average, earned through genuine engineering work (absorber cleaning cycles cut from 46 times a year to four). Beach Energy's recent exit from the Otway Basin, selling its Artisan interest to Amplitude, further reduces the number of players competing for the basin's remaining gas. The advantage is narrower than it looks, though: it depends on continued reservoir performance at fields that are naturally depleting, and on the growth project successfully replacing that volume. Absent that project, the moat has a shelf life of roughly five to seven years.

Management & Capital Discipline

Management's operational record is strong: unit costs have roughly halved over three years through plant debottlenecking, and the company has delivered three consecutive record production years. Capital allocation has been disciplined ahead of the current spending cycle, with debt repaid down to a fraction of EBITDAX and a $146m equity raise completed to pre-fund the $515m two-year capital programme. Management was also transparent about the Elanora and Isabella exploration failure, taking the write-off without spin. The one place scrutiny is warranted: public commentary about earnings "doubling by FY29" implies EBITDAX around 75% above what our production and pricing assumptions support.

Financial Position

The balance sheet is in good shape ahead of the capital cycle. Net debt to EBITDAX sits at roughly 0.2 times, and available liquidity of over $440m comfortably funds the remaining spend without further equity raises under our base case. The main balance sheet risk is not leverage but the $426m rehabilitation provision for eventual field decommissioning, equivalent to 85% of the current equity base. It is long-dated (roughly 11 years weighted average maturity) with partial tax deductibility, and the company can comfortably weather a cyclical downturn, though it cannot ignore this obligation indefinitely.