Cooper Energy : Quarterly Activities Report September 2019 15 October 2019

Q1 FY20

Quarterly Report for 3 months to 30 September 2019

15 October 2019

Key features:

• Quarterly production: up 22% to 0.39 million boe from prior quarter's 0.32 million boe
• Quarterly revenue: up 21% on prior quarter to a record $22.7 million from $18.7 million
• Sole Gas Project: upstream project completed, within budget, ready to supply gas to Orbost plant
• Gas discovery offshore: Annie gas field discovery, offshore Otway Basin
• Cooper Basin: successful 3-well appraisal at Parsons
• New tenements: Production Licences VIC/L33 and VIC/L34; Exploration Permits VIC/P76 offshore Otway Basin; VIC/P75 offshore Gippsland Basin.

Managing Director's comments

"The September quarter was successful on many fronts. Quarterly sales revenue was a record, we completed the offshore development of the Sole gas field, made the promising gas field discovery at Annie, had successful oil appraisal drilling results at Parsons in the Cooper Basin and spudded Dombey-1 which recorded a new gas field discovery in the onshore Otway Basin after quarter's-end. These drilling results have the potential to significantly upgrade the value of our portfolio.

"There was a series of events which add significantly to the value of our offshore Otway Basin gas hub: the Annie gas field discovery; the grant of production licences covering the section of the Black Watch gas field within our acreage; the grant of exploration permit VIC/P76 which adjoins, and contains part of, the Annie gas field; and the preparations to acquire the Minerva Gas Plant. Our Gippsland Basin hub has been expanded through the grant of exploration permit VIC/P75, which is surrounded by the most substantial producing oil and gas fields in southern Australia.

"The busy work program continues in the current quarter - assessing the results at Annie and Dombey, resuming drilling in the Cooper Basin, commencing commissioning at Sole, completing the Minerva Gas Plant acquisition and preparing our next offshore drilling campaign".

Key Measures

$ million unless indicated	3 months to	Prior Qtr	Qtr on Qtr	FY20	FY19	Yr on Yr
30 Sept 19	June 19	change %	YTD	YTD	change %
Production million boe	0.39	0.32	22%	0.39	0.37	10%
Sales revenue	22.7	18.7	21%	22.7	21.8	4%
Capital expenditure (cash)	21.0	38.4	- 45%	21.0	76.2	- 72%
Cash at end of quarter	166.8	164.3	2%	166.8	203.8	-18%
Net debt/(cash) at end of quarter	54.3	53.9	-1%	54.3	(50.6)	207%

Further comment and information:

David Maxwell [phone]	Don Murchland [phone]
Managing Director	Investor Relations

Financial

Sales

Sales revenue for the 3 months to 30 September 2019 (the September quarter) was $22.7 million; 21% higher than the prior quarter's $18.7 million due to higher gas production and prices. Revenue from the sale of gas of $17.2 million was 32% higher than the prior quarter.

Sales revenue generated in the September quarter was 4% higher than the previous corresponding period (and year to date) as higher gas prices and production more than offset lower revenue from oil. The average realised oil price for the quarter was A$107.48/bbl, 5% lower than the pcp average of A$113.65/bbl.

Cash and borrowings

Cash at 30 September 2019 was $166.8 million, compared with $164.3 million at the beginning of the quarter. Borrowings increased from $218.2 million to $221.1 million. Net debt increased from $53.9 million to $54.3 million during the period.

Commodity hedging

Cooper Energy uses hedging to protect against downside oil price scenarios and retain partial exposure to higher oil prices. Hedging in place as at 30 September 2019 is as follows:

(bbl remaining as at 30 September 2019):	FY20 Q1
US$50.00 - U$73.00: zero cost collar options	9,451

Capital expenditure

Incurred capital expenditure

	September quarter 2019			Year to date FY20
$ million	Exploration	Development	Total	Exploration	Development	Total
Otway Basin	23.2	0.4	23.6	23.2	0.4	23.6
Gippsland Basin	1.0	10.6	11.6	1.0	10.6	11.6
Cooper Basin	1.9	1.0	2.9	1.9	1.0	2.9
Other	-	1.2	1.2	-	1.2	1.2
Total	26.1	13.2	39.3	26.1	13.2	39.3
Cash expenditure
	September quarter 2019		Year to date FY20
$ million	Exploration	Development	Total	Exploration	Development	Total
Otway Basin	10.2	1.6	11.8	10.2	1.6	11.8
Gippsland Basin	0.3	5.4	5.7	0.3	5.4	5.7
Cooper Basin	2.0	0.3	2.3	2.0	0.3	2.3
Other	-	1.2	1.2	-	1.2	1.2
Total	12.5	8.5	21.0	12.5	8.5	21.0
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Quarterly financial statistics

Refer notes below for information on calculation	Sept 19	Prior qtr	PCP qtr	Change on	Change on	FY20	FY19	Yr on Yr
qtr	Jun 19	Sept 18	prior qtr %	PCP %	YTD	PCP	change %
Sales
Sales revenue	$ million	22.7	18.7	21.8	21%	4%	22.7	21.8	4%
Sales volume	Gas PJ	2.1	1.6	1.9	31%	11%	2.1	1.9	11%
	Oil kbbl	50.6	54.5	59.8	-7%	-15%	50.6	59.8	-15%
Condensate kbbl	1.8	1.2	1.3	50%	38%	1.8	1.3	38%
Oil direct operating cost	AUD/bbl	34.97	35.38	36.17	-1%	-3%	34.97	36.17	- 3%
Capital Expenditure (incurred $ million)
Exploration & appraisal		26.1	5.9	0.7	342%	3,629%	26.1	0.7	3,629%
Development & fixed assets		13.2	41.4	66.2	-68%	-80%	13.2	66.2	-80%
Total incurred capital expenditure		39.3	47.3	66.9	-17%	-41%	39.3	66.9	-41%
Capital Expenditure (cash $ million)		21.0	38.4	76.2	-45%	-72%	21.0	76.2	-72%
Cash and borrowings ($ million)
Cash and term deposits		166.8	164.3	203.8	2%	-18%	166.8	203.8	-18%
Cash held in escrow		-	-	5.8	0%	-100%	-	5.8	-100%
Investments		1.4	1.3	1.9	8%	-26%	1.4	1.9	-26%
Total financial assets		168.2	165.6	211.5	2%	-20%	168.2	211.5	-20%
Total drawn debt		221.1	218.2	153.2	1%	44%	221.1	153.2	44%
Net debt /(cash)		54.3	53.9	(50.6)	-1%	207%	54.3	(50.6)	207%
Issued Capital (million)
Issued shares		1,621.6	1,621.6	1,601.1	0%	1%	1,621.6	1601.1	1%
Performance Rights		16.0	16.0	17.8	0%	- 10%	16.0	17.8	-10%
Share Appreciation Rights		39.8	39.8	46.0	0%	- 13%	39.8	46.0	-13%

Notes:

• Sales figures for most recent quarter are preliminary
• Sales revenue includes impacts from provisional pricing. Under the accounting standard AASB 15 Revenue from Contracts with Customers which was adopted by the company on 1 July 2018, movements in provisional pricing will be disclosed separately in the financial report
• Prior periods have been updated for final reconciled figures
• Direct operating costs include production, transport and royalties
• Investments shown at fair value at the reporting date shown
• Drawn debt excludes capitalised transaction costs

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Production

Gas production of 2.07 PJ for the September quarter was 27% higher than the prior quarter and 10% higher than the September quarter 2018. The increase in production is attributable to higher output from both Casino Henry and Minerva gas operations. Factors responsible for the higher quarterly production from these projects are discussed under 'Operations review' commencing page 5.

Cooper Energy share of production for 3 months to 30 September 2019 and financial year to date

By product		Sept qtr 19	Prior qtr	PCP qtr	Change on	Change on	FY20 YTD	FY19 PCP	Yr on Yr
	June 19	Sept 18	prior qtr %	PCP %	change %
Sales gas	PJ	2.07	1.63	1.88	27%	10%	2.23	1.88	10%
Crude oil &	kbbl	53.81	57.23	62.52	- 6%	- 14%	53.81	62.52	- 14%
condensate
Total	MMboe	0.39	0.32	0.37	22%	5%	0.39	0.37	5%

By project		Sept qtr 19	Prior qtr	PCP qtr	Change on	Change on	FY20 YTD	FY19 PCP	Yr on Yr
	June 19	Sept 18	prior qtr %	PCP %	change %
Casino Henry
Sales gas	PJ	1.75	1.37	1.63	28%	7%	1.75	1.63	7%
Condensate	kbbl	0.87	0.44	0.52	98%	67%	0.87	0.52	67%
Minerva
Sales gas	PJ	0.32	0.26	0.25	23%	28%	0.32	0.25	28%
Condensate	kbbl	0.76	0.73	0.74	4%	2%	0.76	0.74	2%
Cooper Basin
Crude oil	kbbl	52.18	56.06	61.26	-7%	-15%	52.18	61.23	-15%
Total	MMboe	0.39	0.32	0.37	22%	5%	0.39	0.37	5%

Note: figures rounded. As a result, some totals and percentage changes displayed may not equate with calculation from figures displayed.

4

Operations review

Otway Basin

Offshore
The company's interests in the Otway Basin
Otway Basin, offshore
offshore Victoria include:

1. a 50% interest in, and Operatorship of, the producing Casino Henry Netherby ("Casino Henry") Joint Venture (VIC/L24 and VIC/L30). Mitsui E&P Australia through its subsidiaries hold the remaining 50% interest.
2. a 50% interest in, and Operatorship of production licences VIC/L33 and VIC/L34 which contain part of the undeveloped Black Watch gas field. These production licences were granted during the quarter and cover the areas previously contained within the Retention Leases VIC RL/11 and VIC RL/12. Mitsui E&P Australia through its subsidiaries holds the remaining 50% interest.
3. a 50% interest in, and Operatorship of, the VIC/P44 exploration permit. Mitsui E&P Australia hold the remaining 50% interest.
4. a 100% interest in the exploration permit VIC/PL76 which was granted during the quarter. This permit is discussed further under the heading "Exploration" following.
5. a 10% interest in the Minerva gas operations comprising the offshore licence VIC/L22 and the Minerva Gas Plant, onshore Victoria. The Casino Henry Joint Venture participants have contracted to acquire the Minerva Gas Plant from the Minerva Joint Venture on cessation of the plant's processing of gas from the Minerva gas field. This event occurred on 3 September 2019 and the parties are moving to completion of the transaction in the December quarter 2019.

Production

Cooper Energy's share of production from the offshore Otway Basin during the September quarter comprised 2.07 PJ of gas and 1.63 kbbl of condensate.

Casino Henry accounted for 1.75 PJ of gas and 0.87 kbbl of condensate compared with 1.37 PJ of gas and 0.44 kbbl of condensate in the prior quarter. Production rates for the September quarter benefited from recharge following the shutdown in the previous quarter.

The Minerva gas field reached end of life during the quarter, with production from the field being shut-in on 3 September 2019. Production rates increased due to swapping the producing well to Minerva-4. Minerva contributed gas production of 0.32 PJ and condensate production of 0.76 kbbl for the quarter in the 65 days it operated prior to shut-in, exceeding the prior quarter output of 0.26 PJ of gas and 0.73 kbbl of condensate.

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