Amplitude Energy Limited (AEL) Earnings Call Transcript & Summary

Good afternoon, and thank you for joining the Cooper Energy webcast presentation and conference call regarding the acquisition of the Orbost Gas Processing Plant, $244 million equity raise and $400 million underwritten debt facility. My name is Eddy Glavas, and I'm the General Manager of Commercial and Development and Acting Investor Relations Manager at Cooper Energy. I'm joined by Managing Director, David Maxwell; and Chief Financial Officer, Dan Young, who'll be taking you through the presentation this afternoon. After the presentation, we will be hosting a Q&A session, and we welcome your questions. Presentation and announcement were released to the ASX this afternoon and are available on the Cooper Energy website. This webcast is being recorded, and this will also be made available on our website later today. Please note the important notice and disclaimer information on Page 2 and 3 of the presentation and on the final page of the ASX announcement. I will now hand over to David Maxwell to kick off the presentation.

Thanks very much, Eddy. And let me add my welcome to everybody that's listening to the call live and also those that will listen later on in the recorded session. And apologies that the start time slipped 30 minutes, but it was all -- that was designed to allow everybody the opportunity to see what was released this afternoon. Welcome to what is an important day and key milestone for Cooper Energy. The acquisition and funding announcement this afternoon is transformational for the company, accelerates the next growth phase. And this is happening at a time when the market needs more gas and the price outlook is strong. Today, in one stroke, we addressed the issues that have been impacting the company value and share price over the last couple of years. Firstly, an overview of what has been agreed with APA and our banks, Slide 6. Cooper Energy will acquire 100% of the Orbost Gas Processing Plant from APA. The acquisition, together with the funding plan, is earning- and cash flow-accretive and significantly strengthens the company's actual and strategic value. The acquisition delivers an immediate cash flow increase as we remove the capital recovery component of the Orbost Processing tariff. There are benefits from the alignment of interests from the reservoir through to the market and an integrated approach when combined with our Athena Gas Plant. This transaction is a clear alignment with our domestic gas-focused strategy. There is now an enhanced opportunity to optimize and maximize value across the 2 ideally located cost-competitive gas hubs. Here, I refer to the Gippsland-Orbost hub and the Otway-Athena hub. And all this is happening at a time when gas supply is tight and existing gas prices and the outlook for future gas prices is strong. Cooper Energy now has a stronger balance sheet and the basis for an enlarged debt capital platform. The transaction is the opportunity to accelerate growth in both the Gippsland and the Otway Basins. And importantly, we maintain our carbon-neutral status. Turning to the transaction and funding summary, Slide 7. Cooper Energy is acquiring the Orbost plant and the associated infrastructure from APA for between $270 million and $330 million. There is a fixed upfront payment of $210 million at completion, and this is expected in the second half of May, and total deferred payments of $60 million to $120 million. That's between $60 million and $120 million, with the final amount linked to the Orbost performance during the -- what's referred to as the transition period. This is the period between financial close, second half of July, as I mentioned, and the transfer of the major hazard facility license to Cooper Energy, which is expected to be some 6 months from now. The only condition of the acquisition completion is the completion of the equity raising announced today. The equity raise is at a price of $0.245 per share, which is a 10.8% discount to TERP and a 17.1% discount to the 5-day VWAP. Specifically on debt funding, we have a new fully funded underwritten $400 million senior debt facility with domestic and international banks and the opportunity to upsize the facility by a further $120 million. The upsizing is subject to later lender approval. This is effectively a more than doubling of the current debt facility, which is some $200 million. Slide 8 summarizes the consideration. As mentioned, the purchase price range is $270 million to $330 million, with an upfront payment of $210 million and the deferred component allocated across 2 or 3 years. The total amount will be determined by the average Orbost plant performance in the period when APA is operating the plant. Here, they're operating the plant on behalf of Cooper Energy until the major hazard facility license is awarded to Cooper Energy. The table on the right summarizes the price and payments at the different average processing rates during APA operatorship. This is until the major hazard facility license is awarded. For example, at an average processing rate of 55 terajoules a day, the total consideration is $285 million, with $200 million -- $210 million upfront, $40 million paid after 1 year from completion and $35 million paid 2 years from completion. This payment structure is a good balance of processing rate and reward at a time when all Sole production over and above the gas sales agreement nominations can be sold into the spot market. Turning now to Slide 10. Gas supply in Southeast Australia is tight, and the outlook is it's getting even tighter. Against this background, we have seen Victoria and Sydney spot prices increase significantly over the last 6 months. The spot price currently is capped at AUD 40 per gigajoule. The international LNG price is having an increasing influence on gas prices in Eastern Australia, something the ACCC has also identified in their own analysis. Please note that EnergyQuest are forecasting an uplift in term gas contract prices. And this aligns with the experience that we've had with our own customer discussions. On Slide 11, Wood Mackenzie have illustrated commercial reserves in Southeast Australia based on their own analysis. The commercial reserves here are the Wood Mackenzie's assessment of the likely reserves to be commercial from known resources. It's a little bit different to what you might refer to as proven and probable reserves. The Cooper Energy reserves and resources are well positioned relative to others in terms of location, cost and exposure to the spot price. This chart helps illustrate that Cooper Energy is really the only pure play for investors' exposure to the Southeastern Australia gas market. Slide 12 outlines the 2 hubs and the integrated Cooper Energy ownership and operatorship position across the 2 hubs. And here, I'm referring to Athena and the Otway hub and Orbost and the Gippsland hub. I draw your attention to the comment, the Orbost Gas Plant acquisition price is equivalent to a forward EBITDAX multiple of 4.4x to 5.2x. This is very attractive for a key gas or energy infrastructure asset. The acquisition provides a greater ability to optimize and time the development opportunities across the 2 hubs operated by Cooper Energy. Slide 13. This outlines the ownership, resource, gas plant processing rates and capacities in each of the Otway-Athena and Gippsland-Orbost hubs. Included on this slide are the customers to whom we sell our gas under term contracts. Slide 14. The acquisition and integration into the company's Southeastern Australia portfolio enables greater optionality and value creation across the total portfolio. The enhanced alignment across the gas value chain delivers significant synergies for both the Gippsland and the Otway assets. It also allows Cooper Energy to utilize and deepen the key relationships, which are so important with the regulators, governments, banks, communities, shareholders and customers, for the benefit of all. I mentioned the Orbost Gas Processing Plant acquisition is highly accretive for cash flow and earnings. Slide 15 outlines this for Orbost processing rates between 45 terajoules a day and 60 terajoules a day for Sole gas. I'm not intending to go through all these scenarios but rather emphasize the very large impact the acquisition and funding has on group cash flow generation and the resultant highly accretive nature of this, including on a per share basis given we're fully equity funding the acquisition. Looking at the top left-hand side chart and focusing on 55 terajoules a day. Our EBITDAX from the Gippsland Basin goes from around $200,000 a day to around $360,000 per day. Based on a conservative spot gas price assumption of only $10 a gigajoule. I note that today's price is circa 4x this level. If we annualize this and move them to the top right-hand side, you can see that this results in almost $60 million of additional EBITDAX. As we're not paying PRRT at Sole and given the group's historic carryforward tax loss, the circa $60 million increase in EBITDAX translates almost dollar for dollar to after-tax unlevered free cash flow, as the sustaining CapEx at Orbost is fairly minimal. On a per share basis and focusing on the EBITDAX and cash flow uplift, this translates to per share accretion of around 12%, an 80% increase to EBITDAX versus a roughly 60% increase in shares. On that metric alone, this shows how compelling a transaction the acquisition of Orbost is for Cooper Energy shareholders. Slide 16 illustrates the significant leverage to increasing processing rates and spot gas prices up to the current spot price cap of $40 per gigajoule. The gray horizontal dash line shows the maximum daily quantity of contracted gas from Sole, which we sell under long-term take-or-pay contracts to our portfolio of quality gas customers. At processing rates at -- as processing rates at Orbost push up and over 50 terajoules and, as we've recently seen, reasonably stable production at over 60 terajoules a day, the incremental daily EBITDAX from our integrated position in the Gippsland, that is the combined upstream and midstream EBITDAX generation, increases rapidly. At the capped $40 per gigajoule price level we've seen in the last few weeks and the 60 terajoule per day processing gas rate at Orbost, we're at almost $800,000 of daily EBITDAX compared to a bit under $300,000 at the contracted level. Slide 17. This summarizes the Otway Basin growth opportunities, which include existing contingent resources, such as Annie, and low-risk exploration utilizing the existing pipeline and the Athena Gas Plant infrastructure. The OP3D project, or Otway Phase 3 development, is getting ready to enter the detailed engineering and design phase ahead of a final investment decision in the medium term. Annie and other offshore gas is receiving a lot of interest from the long-term gas customers. This perhaps is no surprise given the current gas market outlook in Southeast Australia. Slide 18 illustrates for the Gippsland Basin with the opportunity of the Orbost Gas -- sorry, excuse me, Slide 18 illustrates the same for the Gippsland Basin with the addition of the Orbost Gas Processing Plant. This includes the development opportunity of the existing Manta contingent resource via the Orbost Gas Processing Plant. In both the Gippsland and Otway Basins, there are some material gas exploration opportunities, which can be readily commercialized post discovery through our own facilities and gas plant into a very attractive gas market. Turning to Slide 19. The Cooper Energy industry-leading net-zero carbon position will be maintained post the Orbost acquisition. And we will maintain our commitment to net zero as we further grow our business. It is a core part of who we are as Cooper Energy. This position has received a lot of very positive feedback from our financiers and many investors. Now turning specifically to the Orbost Gas Plant, or OGPP as it's often referred to. Slide 21. The Orbost plant processes our Sole gas that's 100% Cooper Energy owned for sale into the long-term gas sales agreements with AGL, EnergyAustralia, Alinta and the Visy Group. Gas above the nominations from these customers can be sold into the stock market, as I mentioned. The sum of the maximum daily quantities under the GSAs is currently 47.7 terajoules per day, the dash line on the graph I showed earlier. Therefore, production above this can be sold into the spot market. The Orbost Gas Processing Plant acquisition includes all the property, plant and equipment and the services required to operate the plant. Offers to transfer employment from APA to Cooper Energy will also be made to the existing Orbost operations and technical staff. As I noted on an earlier slide, Cooper Energy owns 100% of the Manta resource and a number of very interesting Gippsland exploration opportunities. We expect this gas to be processed through the Orbost Gas Plant together with any economic resources nearby owned by others. Slide 32 (sic) [ Slide 22 ] illustrates the Orbost Gas Plant's performance since 1 January this year. The solid light red line is the customer nominations, and the green shaded area is gas sold to the spot market. Above the production profile in blue is the actual spot gas price for Victoria and Sydney. The key is improving the processing rate stability in the plant and steadily increasing that processing rate. Significant improvements have been made in this regard over the last 9 months or so, and there are opportunities for further improvements. Slide 23. A detailed plan and team has been assembled to manage the operatorship transfer of the Orbost plant from APA to Cooper Energy. This involves the regulatory approvals and the integration of people and systems and planning for the future. At this point, I'm going to hand over to Dan Young, our new CFO, to take you through the funding details.

Thank you, David, and good afternoon, everyone. As you've heard from David, today's announced acquisition of Orbost is transformational for the group, and that includes from a financial management point of view as well. We are very pleased to announce that we've executed commitment papers for a new $400 million fully underwritten revolving corporate debt facility, partial amortizing and with a term of 5 years and 1 quarter. The loan is an upstream gas and oil reserves-based facility, which is an ideal source of debt financing for Cooper Energy, maximizing upfront debt sizing and at a very competitive cost of funding. The incremental cash flow from Orbost substantially increases Cooper's debt capacity, as is demonstrated by the doubling in available funding from the current circa $200 million facility. It also includes scope for a further $120 million via an accordion facility to fund additional growth of the business, including Annie. We have a very strong underwriter group. Despite the headwinds for upstream borrowers over the last 2 to 3 years, we've actually seen a number of new banks seek us out. And indeed, we have a new bank in the underwriter group. This is a testament, not just to the East Coast Australian gas market thematic or to the quality of the underlying Cooper credit story but also to Cooper Energy's current net-zero position. And it's exciting to see what we can do marketing our net-zero gas. But from a funding point of view, it is a key source of competitive advantage. We are virtually unique worldwide as a currently net-zero upstream E&P company. And it presents a real advantage position to secure funding to accelerate organic growth and, thus, derisk commercialization of our discovered resource base or, indeed, our prospective resources. Turning to Slide 26. The terms of our fully underwritten equity raise are set out here. The great majority of the raise comes in the form of a 2-to-5 entitlement offer, with the addition of a placement of $84 million to deliver an incremental piece for a total raise of $244 million. The offer price is a 10.8% discount to the TERP based on Friday's VWAP of $0.293 per share, which is very competitive compared to recent precedent transactions. I do want to say one thing quickly in regard to the retail offering and in view of the significant portion of retail-based investors in our register. The 2-for-5 entitlement offer is, of course, mirrored for retail investors. But we have also arranged to ensure retail investors can also top up from shares not otherwise taken up in the retail offering and, therefore, increase their proportionate interest should they wish to do so. Set out on Slide 27 the timetable for the equity raise. The institutional portion of the raise is expected to be completed for all practical purposes tonight, with settlement to occur 10 days later on Thursday week, 30 June. We expect to lift this morning's trading halt and for shares to resume trading on Thursday morning, 3 days from now. The retail offer is scheduled to close in roughly 2.5 weeks' time, on Thursday, 7th of July. Turning to Slide 28. We present the pro forma impact of the new underwritten debt facility and underwritten equity raise. This is working from our published December 2021 actuals. You can see that our net debt-to-total book capital goes from 26% to 17%, while our net debt to EBITDAX falls from over 2x to around 1.4x. I do want to say thank you to my colleagues and our advisers for all of the work to get to today's point, with both the new debt facility and equity raise fully underwritten. More broadly than gearing or leveraged data points, the combined impact from the new debt facility and the equity raise is to reset the balance sheet today in combination with the acquisition in a way that really sets up the group to fully fund its organic growth plans and capital needs. This is illustrated in the waterfall chart on Slide 29, which I'll spend a minute talking through. This slide sets out a view on funding sources and uses over the next 3 years through to June 2025. There are 2 scenarios shown for sources, 1 in solid green and 1 in a [ fetch ] green. Solid green is based on 50 terajoules a day and spot gas prices of $10 per gigajoule. The upside case is in [ fetch ] green based on 55 terajoules a day and a gas price of $15. The business has around $100 million of cash today. And you'll see that as a solid gray bar at the beginning of the waterfall. Free cash flow from existing operations over the next 3 years will generate around $200 million plus or minus, which is shown in the first green stacked bar. There is some significant upside to that if Orbost can produce at higher rates, into the upper 50s or 60, or if we see a persistently stronger gas price, in the mid- to higher teens or above. Ownership of Orbost releases the business from a significant capital charge, and you see that in the next green bar. This amount includes the upfront purchase consideration and integration costs and net proceeds from the equity raise. And remember, as David talked about on Slide 16, with a relatively fixed cost base, this is an asset with very significant earnings leverage to higher gas prices and higher processing rates. The last 2 green blocks represent the incremental debt capacity from the new underwritten $400 million facility. The first block represents the incremental debt capacity from ownership of the midstream, namely Orbost, while the second block represents incremental debt capacity that comes from sanctioning our Otway discovery 2C resource at Annie. The last block partly reflects the optionality we've secured in the $120 million accordion feature that I mentioned earlier. Uses are also shown by 2 scenarios: a base case in solid red for the development of Annie, which David mentioned earlier, plus the BMG abandonment expenditure, while the [ fetch ] red is a higher cost base scenario for both. Importantly, you can see that we can comfortably fund the deferred payments to APA, including any performance incentives that are triggered if APA can run the plant at higher rates over the coming months, leading up to WorkSafe Victoria's acceptance of our major hazards license as well as the Annie development in the Otway and our BMG decommissioning activity. There is also surplus cash to continue to invest into further appraisal and exploration of the twin hub gas footprint, as David has touched on. So this reset really sets our balance sheet up to fully fund the group over the next 3 years, to the point where Annie gets to first gas and the scale of the business is materially higher and, in essence, therefore, is really setting us up for organic growth over the next decade. With 10 days before the end of our current financial year, a quick word on guidance for full year underlying EBITDAX. As many of you will be aware, we've twice revised guidance upwards this quarter on the back of improved processing rates at Orbost and the rapid increase in spot gas prices in Victoria and Sydney. This chart demonstrates our leverage to processing rates while holding spot gas prices constant at $40. Based on the operator's latest case, which can be seen in the green bar on the chart, we remain on target to comfortably achieve our latest revised guidance. And it's worth coming back to a point that David mentioned earlier that we're buying Orbost at a multiple of around 4.4 to 5.2x EBITDAX, which is, on its own, a very compelling price for midstream energy infrastructure. But it's also highly accretive relative to our own multiple, which is 8.4x our own EBITDAX. I'll now turn it back to David.

Thanks very much, Dan. Slide 32, the growth staircase. The combination of the acquisition of the Orbost plant, the equity raise and new and enlarged funding -- and the new and enlarged funding facility enables the progress and delivery of the high-value growth opportunities within the existing portfolio across the 2 hubs. This is a mix of growing existing production at Sole Casino Henry and Netherby; the development of contingent resources, such as Annie and Manta; and low-risk, quick-to-commercialize exploration in both basins and, in particular, the offshore Otway Basin. So turning to Slide 33 and to wrap up. The Orbost Gas Plant transaction and funding announced today can be summarized as follows. Firstly, in the Gippsland Basin, we are now fully integrated, which allows us to drive improvements, increases the flexibility available to us to further develop and optimize value. Secondly, this is across both hubs, the twin hub approach we often refer to. Thirdly, Cooper Energy is a clear Southeast Australia gas play at a time when gas is in short supply and there has been a step change in pricing, particularly spot and medium-term prices. Fourth, the transaction is immediately cash flow-accretive and earnings-accretive. Fifth, the acquisition and funding announced accelerates the Cooper Energy growth staircase. With joule up, there's more than 1.1 Tcf of new development opportunities. And finally, Cooper Energy maintains the industry-leading net-zero carbon neutral position. On that note, happy to open the lines and take any questions.

[Operator Instructions] Your first question comes from Nik Burns from Jarden Australia.

David, congratulations to you and the team for getting to this point. So I'm sure it's been a long path for you. I've got a few questions, if I can. First of all, around the performance payments. Slide 8, you outlined the level of performance payments at different gas throughput levels. Can you just clarify what happens if, for example, the plant averages, say, 59 terajoules a day through this period? Do you pay just the $15 million in performance payments at the 55 TJ level? Or is there some sort of pro rata adjustment between that $15 million and that higher amount?

So if I interpret your question right -- well, firstly, thanks for the question, Nik. And if I interpret the question right, are you saying is it a straight-line relationship between the different step points that we had in that slide? The short answer is yes. It is. It moves in a pro rata dollar with rate. Does that answer the question?

Yes. Yes, it does. I wasn't sure if that was a discrete step there or was a straight line. So now that makes a lot of sense.

It's not a stepwise function, so no. So just to play that back. So if, for example, it was 54, it wouldn't be $270 million. It would be a number worked out as the pro rata between $270 million and $285 million.

Perfect. No, that's great.

Probably pick up, I think, on footnote 2 to the -- to that table. [indiscernible] not a lot time to see this.

No problem. And then just in terms of average Orbost plant performance through this period, what were your expectations here? APA obviously has a major incentive to run as high as possible during this period. Do you have any discussions with them around expectations for performance? And do you think we could see new record levels reached here?

It's a good question. Look, expectations or -- I think I don't -- not sure that I would use that word. But we saw through May, they were able to sustain in the mid-60s. And then that was following the addition of the polishing unit. The polishing unit is currently offline, and we're running in the low 50s. I mean if it's my judgment call and assuming steady state, stable operations with periodic claims, I would say something in the mid-50s. But the way this is structured, APA is also incentivized to increase the rate and, importantly, keep those rates as stable as possible. And I think what you wouldn't want to be doing is pushing the rates too hard and then having to come back and rebalance the plant and be down at lower rates for a sustained period. So that -- it's the average that we look through here, including when the plant has one absorber or the effect -- first or second absorber may be down for cleaning. So it really is the average rates. I think -- I would be thinking and hoping that we can at least be in the mid-50s. And it would be good if we are a little bit higher than that. And that's a win-win for both ourselves and for APA.

Great. Just maybe one more, and then I'll jump back in the queue. Operating cost payments, tolls and tariffs during the operations service period, I think you mentioned upfront about the removal of a capital recovery component. Can you just explain this in more detail, please?

Yes. I'll say some words and then certainly ask Dan to add in. What we're doing effectively, I mean our tariff with APA is a capital component. Well, it's not a capital component. It's an operating component. But that's what it's made up of to be a total tariff per gigajoule. And therefore, we owning the plant and equity funding it, all we're paying is the operating costs. So in effect, we're netting off the capital component of that tariff. Maybe -- I don't know, Dan, if you wanted to add anything and then refer to the chart, which helps tell the story.

Yes. So Slide 15 that David talked through, that capital charge component of the overall processing rate and depending on your assumption around processing rates, of course, but that's around $2.90 a gigajoule. And that's the capital charge we released, and that's what generates that $60 million circa uplift in EBITDAX that you see on the top right-hand side of Slide 15.

Securing the operations service period, will you continue to pay that capital component?

Well, we'll only be -- we'll be paying -- the only people be paying it to is ourselves. So we'll be tariffing. We'll be continuing to tariff our own gas through our own plant. So it's a zero sum. And that since it's a zero-sum game. So we're not paying -- the value to us is that, that capital component, the repayment to APA for upgrading the plant is removed because we are the owners. Through that transition period, post completion, we're the economic -- we're the owners of the asset, and we receive all the returns from the asset. So in a sense, we're paying a tariff to ourselves at that point, and what comes off that is only the operating cost. Does that answer the question?

Yes, it does. Appreciate it.

Your next question comes from Gavin Allen from Euroz Hartleys.

Terrific. So just a real quick one for me. Hoping you can remind me, and I probably should know the answer to this, but I'm just thinking out loud, but what APA paid for the plant initially. And then perhaps further to that, some flavor on what they've spent since on it. Broad stroke is good.

Okay. Thanks, Gavin. I think we announced the transaction -- I'm taxing my memory here. But we announced the transaction with APA, I think, in September 2017, is that right? Yes. I've got some -- got a head nodding up and down, which means it is -- it was right. And when we announced that, at that time, there was 2 parts to it. APA purchased the plant from us and land and associated infrastructure for $20 million. And we entered into an arrangement where they were to upgrade the plant and we would pay them a tariff based on $250 million. So one way to think about it is we effectively paid APA 207 -- we agreed to pay APA $270 million. And the $270 million is working out through a capital charge, which has obviously got a rate of return built into it as well. So on the day, if you netted it back, it was back to $270 million. What APA has actually paid for it, I don't know. But by extrapolation, and they have written down and they declared what they had written it down, it would be in the order of $500 million by extrapolation. It's of that order that they have spent on the plant.

Yes. Okay. And would that sort of correlate in very loose term as to what you think it might cost to replace it?

No. Well, the $500 million might. And we haven't gone and done a full replacement cost analysis. But if I were to draw a line from Athena across to Orbost and then take account of what's been spent, I think $500 million would be a very prudent number, probably a bit on the low side at the moment, for sure, something like that.

[Operator Instructions] Next question comes from Nik Burns from Jarden Australia.

Just first of all, footnote on Slide 16, referring to additional firm capacity, maybe taken by AGL and have the effect of increasing the ACQ under the Sole GSA. Can you just explain this in more detail? I guess if this mechanism is triggered, could it take away from your exposure to spot gas prices? I guess it's the whole thesis on this chart, your exposure there. But just trying to understand the risks of this occurring and effectively increasing that ACQ.

Yes. Yes. Good pick. And glad to see that somebody reads the footnotes, Nik. You might remember back, we -- effective from the 1st of January this year, we transferred some of our supply obligations to AGL from Orbost across to Athena. And under those arrangements, AGL -- we agreed to supply AGL, maintain the full volumes that we had originally contracted with them, with a portion of it coming out of Sole and a portion of it coming out of Athena. As the rates at Sole -- in -- at Orbost increase, AGL have the opportunity to effectively take -- transfer some or all of that back from Athena back to Orbost or from the Otway back to Gippsland. And that's something that we and AGL would work out. In the event that, that happens, it releases capacity or uncontracted gas at Athena, which we would then put into the spot market. So in effect, it's a zero-sum game. What we're using is our portfolio to meet the contractual commitments to AGL as our production grows in either the Gippsland or the Otway, that surplus production can go into the spot market. And we can use production in one source to support this production in another source. So that is really -- when we talk about optimizing across the 2 hubs for the benefit of ourselves and our customers, that's one of the things that we're talking about. And I think the way that we've worked things here with AGL or, turn it around the other way, the way AGL has worked things from us -- with us is really highlighting the benefit of 2 hubs and how we can use that to optimize for both ourselves and meet our contractual commitments and our customers and optimize the offtake that they get access to. [indiscernible] do a footnote on a graph, but did that answer it for you?

It did. Absolutely. No. That was great, David. Just another question. About Orbost, after you take operatorship, do you have any plans to undertake any major capital works there? Or is it too early to make a call on that?

We don't have any firm plans. We've got a few thoughts. Clearly, the focus is to get the major hazard facility, first off, transferred from -- well, not transferred, for the major hazards facility for Orbost to be awarded to Cooper Energy. Our focus will then be on integrating the people into -- and welcoming them into Cooper Energy. Our focus will also be very much on ensuring we can maximize the stable, and I emphasize stable, production rates. And once we've got the stable rates, then inching those stable rates up. And there's a point at which is, okay, we've inched these up to as far as they can reasonably go. And that's through operating -- that's good -- through good operating practices and optimizing what's there at the moment. There's then the opportunity for us to look at further stepping up the production with, for example, the addition of a third absorber. Mind if the plant -- I'll just use some numbers as an example. If the plant was operating at, let's assume at 60, we were to go and put a third absorber in. You can imagine that would release an extra 25, 30 terajoules a day, which we would be able to put into the spot market or contract with whoever we wanted to. That's the way that we're thinking about it. First of all, get the major hazard facility license. Second, get the people on the systems integrated into Cooper. Thirdly, get the rates as stable as possible and then inch the rates up from there. And then there's a step -- there's a point at which you make a step -- we can make a step change. And that, at current -- as illustrated on Slide 16, the economics of that won't be very hard.

Got it, Dave. Just a quick -- one more quick one from me. You've mentioned about the major hazard facilities license. Just trying to -- I think you've given a sort of a circa 6-month time line to get that in place. What's the major impediment or issues? And relating to that, is it made easier by the fact that you're operator at Athena?

Yes. It is made easier that we've already -- the operator is Athena. WorkSafe Victoria has reviewed our systems, processes they've been in and done a few orders with Athena. So they know how we work. That -- so we're not coming from a standing start. That makes it easier. Another reference point, my understanding is that when Beach acquired the Origin assets, and that will involve 2 gas plants, the major hazard facility for those plants was awarded to Beach within 4 months. So we've taken 6 months as a bit of a prudent assessment time-wise. I wouldn't be surprised if it comes in less than that. And we're already -- we're ready to go. We've got a team in place. We've got somebody that knows the Orbost plant, that works closely with APA to lead that team. And it's an independent from the existing operations at Orbost and existing operations team in Cooper Energy. It's a dedicated team specifically to manage the integration and award of the MHFL.

Your next question comes from [ James Hood ] from Cooper Energy.

Guys, can you hear me?

Yes. They introduced you from Cooper Energy, James.

Yes, yes. Apparently, I work for you guys now. A question along the lines of what Nik has already asked, just in terms of what you would do differently at the Orbost Gas Plant to what APA is already doing. But just further to that question, you said that you potentially put -- spend the CapEx to put in a third absorber. Do you have a feel for the kind of cost for that CapEx expenditure for a third absorber?

Take this as highly indicative. And obviously, it would be subject to detailed engineering and design. But something in the order of $40 million, $50 million is what we've being pointed to in the past when we've asked and looked at that question.

[Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Maxwell for closing remarks.

Thank you very much. Well, I think there's a lesson to be learned from this. You get less questions if you do a webcast in the afternoon than if you do one in the morning. But look, there's a lot to take on also. I understand that. I'd encourage people to have a close look at the presentation, have a brief read, listen to what Dan and I have shared with you today. And where there are questions that are not answered, please pick up the phone or send an e-mail into Eddy Glavas, whose e-mail address is on the ASX announcement. As I said at the outset, this is really a transformational event for Cooper Energy, a combination of acquiring the gas plant, the funding that we've put in place through both equity and debt at a time when gas prices are high, the outlook for gas is strong -- pricing outlook is very strong. And we've got development and exploration opportunities. We might have had a tough period over the last year or 2 because some things haven't quite gone our way. We might look back in 12 months' time and think, well, that wasn't so bad because look what's happened. And I do want to acknowledge here APA. I think it hasn't been easy for them. And the way in which they work with us and we've worked with them, even though it has been a bit of a challenge, is appreciated. And we look forward to welcoming the APA folk into the Cooper Energy family. So on that note, thanks very much.