Amplitude Energy Limited (AEL) Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Annual General Meeting of Cooper Energy Limited. As I think many in the room know, my name is Amelia Jalleh, and I'm the Company Secretary and General Counsel of Cooper Energy. We would like to welcome Mr. Jack Buckskin to conduct the traditional welcome to country. Jack is a member of the Gaurna people -- sorry, I need to be closer to the microphone -- who are the custodians of the Adelaide region. Please, Jack.

I don't think I need a microphone. I'll stand over here though, and I'll stand behind because it makes me look cool. This is an opportunity for me to be able to explain what welcomes are about to welcome you all on to country, I'm honored that I have this opportunity of the first person in my family to be able to speak language fluently and publicly. My mother was the first person to lead the missions and reserves in 1972, came to Adelaide was allowed to come at Adelaide then. We actually grow up, had me I was born here, lived my whole life here on the Adelaide Plains, but it wasn't until I finished school that I got the opportunity to start learning my mother tongue language. She didn't grow up speaking a lot of, I guess, language fluently and especially Gaurna, she came here as a young child. My grandfather, her father lived on the missions and reserves and was physically beaten if he spoke his language. And he had to exempt himself for him to leave the missions and reserves. He exempted himself from being an aboriginal person. So we've come a long way in 2 generations and to be able to stand here and welcome people on to country speaking my mother tongue language, but to see our protocols as aboriginal people embedded into mainstream society is amazing as well. It shows you where we're heading each generation as a united place. But a lot of people call me Jack. It's not actually my real name. My real name is Vincent, and I found out my name was Vincent when I started primary school from Ms. Nechki. I always remember Ms. Nechki because she's like, this kid's special, his name is Vincent, his name is Jack. So I went home and I said Mom, Ms. Nechki said my name is Vincent. She goes yes, Vincent is your real name, Jack's only your nickname. I was like, thanks. I'm 6 years old, and I didn't even know my own real name. She goes, you're named after my brother. I said, by his name is Eardy, and she goes yes, Eardy is his nickname, Vincent's his real name. So when I had my son, I called him Vincent as well, just it's like a brand-new tire that hasn't used its traction or its thread yet. So I passed it on. But my aboriginal name is [ Gadnepunyo nowitno ] Kudnuitya, it's a bit of a tongue twister. So Jack's easier for you to remember. I just want to start by acknowledging this part of the lands that we stand on. Tanda Ghania is the dreaming place of the big red kangaroo. We have 9 different environments, what we call yarta, across Gaurna country, and I come from Marni Yarta, which is the Salisbury area. So crossed over 2 lands in order to come to the CBD. But to stand here as a representative of [ other ] Gaurna people and welcome you is an honor. [Foreign Language] And I welcome you on behalf of all the other Gaurna people. [Foreign Language] [ because I have other aboriginal ] people here, welcoming you to this space. [Foreign Language] If you come from afar or you're local to the area, welcome to this part of the country, Tanda Ghania, the lands of the Gaurna people. I remember being a kid and a teacher telling me, we've been around for about 10,000 years. I thought that was a long time. I went to high school, went to 40,000 years, thought that was a long time, went to Uni for 6 weeks before [ then ] I realized you had to do your assignments and I didn't like assignments. So I permanently deferred and I haven't been back, and it went to 60,000 years. And through the work that we do with language and cultural revitalization here, we've got the opportunity to spend a lot of time [ with ] paleontologists. We've been around for 84,000 years in this part of the country, 120 in other regions. But to live in this land and to represent and speak in this mother tongue language that has been part of this land, is an amazing opportunity. We all do it. If we're Adelaideans, we all speak Gaurna, and we don't even know that we're doing it. Places like [ Madindi, Norlango, Odinga, Calendeli, Uradela ], all these place names are original Ghana names that have specific meanings. So when you get to understand those areas and those names, it gives you a better appreciation of the country that you're standing on as well. [ So I ] represent and welcome you all here. I am -- like I said, I am on every opportunity I can to be able to do this, because I think we're really leading a way to -- for people to embrace our culture as your culture. [Foreign Language] Our home is your home. [Foreign Language] Our language is your language as we gather and live on this place together. So [Foreign Language] welcome, everybody, [Foreign Language] I'm going to stick around and enjoy the AGM, I love AGMs. But I'm not sticking around for it. The last conference I was at, was the artificial intelligence conference, which I paid to go to, $340 just to go to sleep. So I didn't realize data analysis was the main thing with artificial intelligence. I thought I was going to see some cool robots and stuff, but we didn't. So I'm not going to stick around for your AGM, but thank you very much for inviting me along and embedding our cultural protocols into your daily lives as well. [Foreign Language] Thank you.

Thanks very much, Jack. Before we move to the formalities, there are several housekeeping matters to mention. In the case of an emergency, a beep, beep, beep will sound, please remain seated and a fire warden will attend to assist. Additionally, an audio message will alert and will be heard in all areas of the function. Should an evacuation be necessary, the fire warden will guide all of the guests safely down the main stairwell from the landing adjacent to the elevators on Level 1. I ask that you please turn off your mobile phones or switch them to silent mode, please. Thank you. Shareholders, proxy holders and corporate representatives attending today's meeting in person will have the opportunity to ask questions in the section immediately following the Managing Director's address. And they will have the opportunity to vote on formal items of business. The Chairman will walk you through that process. Today's meeting is being webcast live via the [ ARIAD ] Capital platform. A recording of this meeting will be available on our website later today. Before handing the meeting to our Chairman, Mr. John Conde, we'd like to share with you a short video about the Morella biodiversity project which -- sorry, our carbon-neutral status and other sustainability projects Cooper Energy is undertaking as part of the energy transition while continuing to supply gas to Southeast Australia. [Presentation]

Good morning, everyone. My name is John Conde. I'm the Chairman of the Board of Directors of Cooper Energy, and I will be chairing this meeting. Thank you, Amelia, and a special thank you to Jack Buckskin who, as he indicated, has not stayed for the meeting, but for his welcome to country. I too extend a warm welcome to you all, and thank you for joining us. We hope you enjoyed the short video and trust it conveyed to you Cooper Energy's commitment to climate action. Last year, I expressed my great hope that we would be gathering face-to-face in 2022, and I'm very happy that after 2 years of virtual meetings, we have been able to come together to hold this AGM in person. Please let me introduce to you the company's directors, all of whom are present at this meeting. David -- from your right to your left, David Maxwell, Managing Director; Amelia Jalleh, who you've already met, Company Secretary and General Counsel; Jeff Schneider, Non-Executive Director, Vicky Binns, Non-Executive Director; Giselle Collins, Non-Executive Director; Hector Gordon, Non-Executive Director; and Tim Bednall, Non-Executive Director. Also present is Betsy Donaghey, Non-Executive Director, who in fact is attending virtually. In addition, in the hall we have Dan Young, our Chief Financial Officer, who started with the company in May this year. I've already mentioned Amelia, who is at the table. Morgan Wright, our Investment Relations lead; and Darren Hall, our Assurance Partner and assurance partner representing the company's auditor, EY. The proceedings this morning will be as follows: I will address the meeting, followed by a presentation from our Managing Director, Mr. Maxwell. After David's presentation, there will be an opportunity for you to ask questions. And then the formal part of the meeting will commence after that question period. What a difference a year makes. This time last year, we met virtually, constrained by the restrictions of the COVID-19 virus. And as I said, it's our pleasure to be hosting you all in person today. I welcome you all. And of course, I extend that welcome to those joining via the webcast. Financial year 2022 has been one of material change for Cooper Energy. Last year, in my opening address, I lamented the performance of the Orbost Gas Processing plant. Not only can I point today to the significantly improved recent performance of the plant, but I can also say that we own the plant. And by May, we expect to be operating it. Additionally, during the second quarter of fiscal '22, we safely and successfully commissioned the Athena Gas Plant. This has been a significant first for your company. Importantly, we have reset the balance sheet for the next phase of our operations and growth, with refreshed and enlarged support from our bank syndicate. I'd like to highlight some of the key aspects of the last financial year. First, COVID. We continued to manage the various challenges of the pandemic, and we remain vigilant to ensure both the safety of our people and our sustained business operations. Our industry-leading safety record has been maintained with 0 lost time incidents in fiscal '22 and a total recordable injury frequency rate of 0.0, which compares to an industry average of 6.91 published by the National Offshore regulator. These are excellent results. It's been critical for our business, enabling us to supply greater amounts of natural gas safely into the Southeast Australia energy market. And I compliment warmly all Cooper Energy staff and contractors for maintaining your discipline with regard to your own safety as well as the safety of your coworkers. With respect to the energy market, modeling conducted by the ACCC shows that the gas supply gap for Southeast Australia relative to demand is forecast to grow significantly between now and 2030. Our analysis agrees with this outlook. The impact on oil and gas prices is attracting a lot of media attention with the federal government's unresolved canvassing of threatened price controls. The Managing Director will have more to say on this in his address. Against these market opportunities and uncertainties, the acquisition of the Orbost Gas Processing plant was very significant for us. As I said, we now own the plant and when the Major Hazard facility (sic) [ Facilities ] license is transferred from APA, we will also operate the plant. We expect this by May 2023, from which time we will be in firm control of our gas processing destiny. Owning and operating the infrastructure across both our Gippsland and Otway hubs provides valuable leverage for Cooper Energy, especially in this strengthening market. With significant near-term development and exploration opportunities around both hubs, we are now able to influence directly the pace and quantum of further growth in production, cash flow and value. Meanwhile, we have continued to see steady improvements in performance at the Orbost plant, including a 33% increase in the average daily processing rate from quarter one fiscal '22 to quarter one fiscal '23. To finance the acquisition of the Orbost plant, in June and July this year the company undertook a $244 million equity raising, comprising a $160 million 2-for-5 accelerated nonrenounceable entitlement offer to all shareholders, along with an $84 million placement to institutional investors. At the same time, the company announced a new debt facility totaling $400 million with an additional $20 million working capital facility. In addition to that, there's a further $120 million accordion facility, which has been agreed with our bank syndicate. This means the company is well funded for the next phase of growth and activity, which we look to deliver in the middle and second half of this decade. That said, the frustrations arising from the volatility of the processing rate at Orbost have not gone away and have clearly impacted our share price. We share these frustrations, and we appreciate the loyalty shown by our shareholders. Shortly, the Managing Director will speak about some of the changes we envisage to the Orbost operations once we become the operator. We appreciate the government and community focus on managing emissions from the energy sector. Cooper Energy has continued to demonstrate its commitment to this. We have now been net 0 for 3 years, fully offsetting our Scope 1, Scope 2 and controllable Scope 3 emissions. Our net 0 position has been certified by Climate Active, and we are committed to remaining carbon neutral as our business grows. Accessing funding is increasingly difficult for companies that do not meet emissions management standards or do not have a clear decarbonization plan in place. We are not in that category, as evidenced by the recent expansion of our banking group from 5 banks to 8. The transition to a decarbonized world must be orderly and with continued investment in cleaner energy, including, in our opinion, gas as a fuel, which enables the transition. However, for the market to transition, it must do so at a pace which is realistic. We cannot just make it happen by chanting the renewable chorus. It requires planning, action and investment that is set against achievable targets, targets that include energy security and continuity of supply. We must consider the reality of society achieving net 0 and the practical challenges of achieving this in the time frame stipulated by the goals of the Paris Agreement. This requires a global solution with everyone playing their part. The reality is Australia's total emissions, not just from power generation, are slightly over 1% of global emissions. To play our part as Australia, the federal government has introduced a 2030 target to reduce emissions by 43% from 2005 levels, putting a mandate on emissions reduction. The scale of this undertaking and the practical challenges are immense. Reflect for a moment what this means in practice. Each generating unit in the base-load power stations in, for example, Eraring and Bayswater in New South Wales, is a 660-megawatt nameplate capacity and often operate well above that at 720 or 750 megawatts. The largest wind farm generator in Australia at the moment is 7 megawatts. So you need 100 of these wind turbines for each coal-fired generator or you need 400 of these wind turbines to replace the 4 generating units at, say, Eraring or Bayswater. In addition, you need firming capacity to supply that energy when the wind isn't blowing or the sun isn't shining. To achieve the 2030 government target requires construction of over 1,100 new wind turbines, that's 12 per month, every month between now and 2030, masses of new solar farms and large-scale firming capacity. Is this achievable? We think probably not. We need to support and enable the energy transition process, and as I've stressed already, this needs to be based on what is achievable. Besides coal-fired electricity generation, which is slated for retirement, or nuclear, for which there seems to be little appetite, gas is the only practical source of this firming capacity in our opinion. If you don't allow gas, the firming capacity requirements needed would be multiple Snowy 2.0 pumped storage systems or a proliferation of large-scale batteries, neither of which is possible in the time frame. The community regards electricity as an essential service, blackouts are not tolerated. And to displace fossil fuels in the near term, gas will be required for firming generation. In addition, gas is required for the industrial sector, for chemical feedstock to produce some of our everyday products, and for commercial and residential use, such as heating. The scale of the renewable energy construction program requires extensive investment in global mineral exploration and development to source the component materials, and hydrocarbon use in the manufacture and distribution of the final products. The International Energy Agency forecasts global demand for lithium alone will increase by 4,200% by 2040, with not dissimilar increases forecast for graphite, nickel, copper and rare earth elements. The imperative is that there be balance in the debate about carbon reduction and energy security. Our communities, our commerce, our industry need gas and electricity to communicate and to function. Our society will crumble if we sacrifice energy security on the altar of carbon reduction. There must be balance in the debate, especially when we are talking about electricity supply, because I repeat, the community regards gas and electricity as essential services. We are very keen to work with the government to be part of the decarbonization strategy and to find practical solutions to maintain reliability in our energy supply. In summary, I believe that gas will have an increasingly important role, keeping the lights on and as a key fuel more generally, in the government's energy transition. For more than a decade, David Maxwell, our Managing Director and Chief Executive Officer, has been responsible for developing, recommending and delivering the strategy for Cooper Energy. His leadership has been unwavering. Cooper Energy today is a very different business from what it was 11 years ago. As announced last month, David has advised the Board that he wishes to retire during the course of 2023 following the appointment of a successor. On behalf of the Board, I extend our sincere appreciation for his commitment, dedication and indefatigable pursuit of the company's strategy, always in the best interest of shareholders. David will leave Cooper Energy with a portfolio of attractive, producing gas assets, exciting near-term, low-risk opportunities and funded growth, a strong balance sheet and a clear competitive advantage in its approach to transition and Net Zero. In the meantime, it's business as usual. David will continue to lead the company. The Board appreciates the lengthy notice that David has given us to help our planning for his successor. And with David's support, which he has committed, we anticipate a seamless transition to his successor sometime next year. On all of your behalves, I thank David. Before I ask David to address us, I note again that the achievements of our fiscal year 2022 were significant, and I'd like to acknowledge and thank all those who helped make it a success. First, our long-term lenders -- our banks -- have demonstrated continued commitment to Cooper Energy, and we have new partners in our bank group. I thank our lenders, our advisers and the Cooper Energy team for their work, including the development of the new debt facility. I thank you, our shareholders, for your continued support, including your participation in the recent capital raise. It was unquestionably a transformational step to acquire Orbost and amidst a period not without difficulties. Your patience has been very much appreciated, and we look forward to the future growth opportunities and to be a proper reflection in the share price of the company's value. Our gas customers have been very supportive. Our customers continue to work with us to achieve mutually positive outcomes. The announcement this morning of the Gas Sales Agreement with AGL to support the OP3D project is testament to the enduring relationship we have with our biggest customer, AGL. We appreciate greatly the support we receive from our local communities in the Otway and Gippsland Basin regions. We recognize that we operate alongside farming, tourism and other industries, and we seek to demonstrate that gas extraction and processing can be managed and economic benefits can accrue to local economies. We actively support our communities, and we appreciate the support we receive from them in return. I record my thanks to my Board colleagues and to our Company Secretary, for their wise and considered counsel and support always. We have a great board, and it is an honor and a privilege for me to be your Chairman. Finally, I record appreciation to the Managing Director, David Maxwell, and his team for their leadership and commitment to Cooper Energy. And as I invite David to address us, I ask you to join me in applauding him.

Thank you, Chairman, and it's my pleasure to address our shareholders today, those here live and those that are watching or listening virtually. Our disclaimer slide. I'll leave this for you to review at your leisure. I draw your attention in particular to the language regarding the forward-looking statements. I'm going to begin my address today with a recap of the fundamental drivers for Cooper Energy: our purpose and values. Cooper Energy's purpose is to contribute to Australia's sustainable energy future by commercializing gas, oil and other resources for domestic markets. We operate and make our decisions with an emphasis on care, shareholder value and sustainability. We energize the lives of thousands of Australians every day. Our culture is driven by the Cooper Energy values. These being care, integrity, fairness and respect, transparency, collaboration, awareness and commitment. These values, the Cooper Energy values, are fundamental to the way we do business. They inform our decision-making and they guide our behaviors. I'd like to make a few comments on the company's strategy and its merits in the current energy environment and the energy outlook in Southeast Australia. And when I refer to Southeast Australia here, I'm referring to New South Wales, Victoria, South Australia and Tasmania. When I refer to Eastern Australia, it's those states plus Queensland. The Australian Energy Market Operator, or AEMO, in their June 2022 Integrated System Plan, titled the very first paragraph in the executive summary, the irreversible energy transition as a challenge and an opportunity. How true these words are. The challenge is to get the balance right between the speed of the transition, cost or price to the consumer and maintaining reliability. This applies to the energy system as a whole as well as the electricity and gas components. The opportunity, or I prefer to think of it as the opportunities, is to reduce emissions and the many activities that are required to make this possible, including developing new cost competitive supply. We've seen in other countries what can happen when you don't get this balance right; witness Germany, shutting down wind farms and prolonging the life of hard coal-fired power plants and restarting a brown coal-fired power station. I'm not advocating for one minute that that's what we want in Australia. But lets plan so as to make sure this does not happen. We advocate directly to the Australian federal government on the need to build investor confidence in the energy sector, and the gas sector in particular, by ceasing to threaten further market intervention. The annual consumer price index rise of 7.3% is the highest in this country since 1990. Households and manufacturers do not need to be misled about the complexity of the gas market and the setting of its pricing. We agree 100% with Graeme Bethune from Energy Quest when he says, there are 2 ways of taking the pressure off domestic prices: you increase supply and you reduce demand. Public discussion about a price cap creates uncertainties, uncertainties which can kill much needed investment decisions to support the new supply that's needed. The industry needs to be recognized for the responsible way it supports reliable energy supply into the market on a low emissions basis. The costs and other consequences of not carefully planning the transition to renewable energy sources highlights the need for balance, clear policy and an achievable pathway. In 2022, Eastern Australia, so that includes Queensland, the Eastern Australia gas market was estimated to be 568 petajoules. 22% or 125 petajoules of this was used for gas-fired electricity generation. Almost half, 45% or 256 petajoules, was used in the industrial sector. And a third, 187 petajoules, was used in the residential and commercial sectors. Some comments on the electricity sector in particular. For the year ended 30 June 2022, just a few months ago, coal-fired generation accounted for 65% of the electricity generated in Eastern Australia. Coal-fired generation capacity was 23 gigawatts. According to the AEMO step change scenario, over 125 gigawatts of additional variable renewable energy is needed by 2050. This is needed to meet energy demand as coal-fired generation is withdrawn from the system. These are massive changes and equate to an 800% increase in the renewables capacity by 2050 from today's levels. Gas is vital to support Australia's transition to renewable energy, in particular to maintain stability in the electricity supply system as we manage this transition. Gas is also critical for a wide range of industrial and chemical products, products such as glass, plastics, fertilizers, paper and a wide range of commercial and domestic applications. And this is not going to change quickly. Turning now to our home state, South Australia, and the electricity supply here as an example. The information on this slide is taken from the OpenNEM website. South Australia is the mainland state which has the most advanced renewables transition pathway of the states in Australia. In the past year, in South Australia, 63% of electricity was generated from variable renewables. This compares to 34% for the entire National Electricity Market, or NEM, in the same period. South Australia is the Eastern state with by far the highest reliance on gas for electricity generation. This is as a result of the high percentage of renewables. South Australia is instructive when trying to understand the role of gas in an electricity grid dominated by variable renewables. South Australia is a window to the future of the electricity supply system in other states. On this graph, we've selected a 7-day period starting on Tuesday, last Tuesday, the first of November. You can regard this as a typical week in the shoulder period. This is not the peak of winter or the peak of summer, when the electricity supply system is likely to be under the most stress. On this slide, solar is in yellow, wind in green and the imports in black. The highlighted red band is gas. Not included on the slide, as it's just too small and it doesn't show up is the Hornsdale Power Reserve, or the Big Battery as they refer to it. The battery has been -- has an important role in frequency stabilization, but is orders of magnitude too small to contribute significantly to firming supply. At the beginning of this 7-day period, starting from the first of November, there was ample solar and wind in the system. But by Thursday, the wind dropped. To maintain electricity supply, natural gas in the red kicked in, together with imports supplied by our electricity interconnectors. The imports are mostly brown coal-generated electricity from Victoria, supporting the variable renewables through to the end of the week. Turning down in the daytime when solar is dominant, and up again in the evening. As coal-fired power generation is retired across Eastern Australia, we can expect this reliance on gas to increase. The clear message from this example is that gas provides reliable, dispatchable and fast start supply in a system dominated by variable renewables. Gas supply in Southeast Australia, so that's the 4 states excluding Queensland, is in rapid decline, as illustrated on this slide. The decline is driven by declining production from existing fields as reservoirs deplete and amidst increasing costs. In addition, there's the increased regulatory burden associated with new developments, which has hampered the opportunity for new supply -- the new supply that's needed. To have a positive impact on the supply shortfall come 2025, just a few years away, new gas projects, including the 2P undeveloped gas reserves, need to be at the final investment decision stage now or very soon. The current forecast is that some 67 petajoules per year, growing to more than 230 petajoules per annum by 2030, needs to be supplied into Southeastern Australia from Queensland CSG and/or imported LNG. This volume is larger than 200 -- this volume is larger than 230 petajoules if the new projects embedded in the profile, which is in the light green, are later than forecast or do not proceed. In addition to the challenge of ensuring adequate gas supply over a year, there's the capacity of the system on the peak days. Almost all parts of the gas production storage and transmission system are now required to operate at capacity to ensure peak daily demand can be met. Future expansions of the gas transmission and processing infrastructure to enable Queensland coal seam gas to flow south or allow for imported LNG will be required. And this requires also additional capital costs. Put simply, Southeast Australia urgently needs new gas supply. The most cost competitive options are gas from the Otway Basin, the Gippsland Basin and the Cooper Basin, all utilizing existing infrastructure, and the Narrabri project in New South Wales. Queensland CSG and maybe imported LNG will still be needed, still be needed to meet the shortfall. This is not an either/or, it's an and. We need the lot. Gas prices in Australia are now linked directly to international gas prices, as gas and LNG becomes more of a commodity. The same applies to other commodities, such as coal, copper, zinc, lead, lithium, et cetera. This means that as the international gas prices move up and down, domestic gas prices will also move up and down. I'm not saying they need to be the same, but I expect they should and will need to follow the same trend. The Cooper Energy strategy and focus has been very deliberate. Our focus is on gas supply to Southeast Australia. At the low end of the cost curve on a delivered basis to customers, the strategy and the assets we have assembled, together with our net 0 commitment, has some clear competitive advantages. The assets in our portfolio are very deliberately built around 2 hubs: as you can see on this slide, the Otway Athena hub and the Gippsland Orbost hub. Cooper Energy will soon operate both hubs from reservoir to gas processing to delivery into the Southeast Australian pipeline network. Each hub includes existing production, new development opportunities from discovered resource and low-risk exploration opportunities. We are able to optimize across the hubs, which realizes cost savings and value, value through optionality and also significant benefits for our customers. Turning now to the past year. Financial year 2022, as the Chairman mentioned, has been transformational for your company. The commitment demonstrated by our people and those who work closely with us has been the backbone of achieving everything we set out to deliver in financial year 2022. At the start of the year, we set ourselves the following imperatives. The Athena gas plant was to be commissioned within schedule and budget. Our gas contracts portfolio to be restructured to match the supply options available. Cash flow and earnings growth. The Orbost gas processing plant's long-term arrangements to be sorted out and a pathway developed for improved performance, and the funding in place for growth. We also sought to deliver leading safety and environmental performance. These imperatives were se, recognizing the operational and financial requirements to solidify the medium- and long-term foundation built around our 2 gas hubs. This is the foundation for increased value for our shareholders and the next growth phase. I'm pleased to say that we delivered, the team delivered on every one of the FY '22 imperatives. We delivered record results from both an operational and a financial perspective. Our 2022 financial year safety and environmental management performance, as the Chairman mentioned, was industry-leading and top quartile, 0 lost time incidents and a total recordable injury frequency rate of 0. We had no environmental incidents at our operated sites. Improving performance at the Orbost plant drove record production, record revenue, record EBITDAX and record operating cash flow. Production was up 26% to 3.31 million barrels of oil equivalent, revenue up 56% to $205 million. Underlying EBITDAX up 169% to $80.7 million, and operating cash flow increased over 600% to around $58 million. The commissioning of the Athena gas plant was a key milestone in December of last year. This was delivered within schedule, within budget and safely whilst managing in the COVID environment. On the 20th of June, we announced we had agreed terms to purchase the Orbost Gas Processing plant from APA. On the same day, we announced the new enlarged and lower-cost $420 million bank facility, the bank debt facility and a $244 million equity raise. We became the owners of the Orbost plant on the 28th of July. The FY '22 activities, the acquisition of Orbost and new funding have transformed the Cooper Energy business. APA remains the operator of Orbost until the Major Hazard facility license is transferred to ourselves as the Chairman mentioned, and we currently expect this to occur in May, just some 6 months from now. We've seen steadily increasing processing rates at Orbost. APA is still managing the regular absorber cleans and every so often, changing the media in the polishing unit. The average rate in the September quarter was 51.4 terajoules per day. A processing rate in the mid-60 terajoules per day is expected when there are no cleans or media changes underway. And I can advise that's exactly what's happening today. Every extra gigajoule we put through Orbost is an extra gigajoule of spot sales. In parallel with the preparations to take on the operatorship of the Orbost plant, we have work underway to increase the stability and the rate when Cooper Energy is the proud operator. This includes optimizing the time to bring online the filtration package that is being installed, but not yet commissioned. Further analysis of the root cause of the foaming and fouling in the absorbers that builds on the work done to date by APA and our own people, utilizing experienced engineering resources, including Paqell, the technology providers, and working with the Orbost operations team to identify improvement opportunities and maintaining clear discipline in our operating practices Cooper Energy is confident that with time, stability and further increased processing rates, will be achieved. Now a few comments on the current year, FY '23 or fiscal year 2023. The targets or imperatives we set for ourselves this year are: maintain our industry-leading safety and environmental performance across our operated sites, transfer the Major Hazard Facility license and operatorship of the Orbost plant to Cooper Energy, further improve the stability and processing rates at the Orbost plant, progress the Otway Phase III development or OP3 project to FID, and maintain our carbon neutral certification and mature our portfolio of exploration opportunities. Delivery of our plans requires strong and constructive relationships with our key stakeholders, including our customers, our lenders, service providers, regulators and the communities in which we operate. We very deliberately endeavor to find the win-win solutions with each group. And against this background, I'm very pleased to advise, as the Chairman has flagged, that today we've announced the signing of a new gas sales agreement with AGL. This agreement at prices consistent with the market underpins the Cooper Energy share of the OP3D project, our next development. This development, together with the portfolio of development and exploration opportunities, illustrates the strength of the Cooper Energy strategy at a time when the market very clearly needs more and new gas supplies. We're more than playing our part. We are regularly receiving inbound inquiries from new customers, in particular large industrials who want to work with us on medium- and long-term contracts. These are contracts on a take-or-pay basis. These customers are well aware of the current market prices. We welcome and take every opportunity to have dialogue to discuss each other's business and the challenges and opportunities for new gas supply, and we look forward to working with these customers as time [ falls ] on. Turning now to the guidance for FY '23. The growth trajectory is forecast to continue this year. On production, that is exactly how we started the year. Our first quarter production for this financial year eclipsed the previous quarterly record from FY '22 by some 13% in volume terms. We have been prudent in guiding to a 12% to 21% increase in production to 3.7 million barrels of oil equivalent, up to 4 million barrels of oil equivalent, a 49% to 86% increase in underlying EBITDAX to a range of $120 million at the low end to $150 million at the high end, and a 44% to 69% increase in capital to $28 million on the low end and $33 million on the high end. The capital guidance excludes the Orbost plant transition costs and the BMG abandonment expenditure planned for fiscal year 2023. The Orbost plant transition and integration costs will be spread across the year and are up to some $20 million, and it's yet to be determined how much of this will be capitalized or not. BMG abandonment spend in FY '23 is a similar amount. And the great majority of the BMG abandonment activity is planned mainly for the first half of the next financial year FY '24. Sustainability is increasingly important and topical, especially in our business, the energy business. As reflected on the video, and as the Chairman mentioned, 2 years ago, we set ourselves the target to be net 0 for our Scope 1, Scope 2 and controllable Scope 3 CO2 emissions. We have delivered on this and have clear plans to maintain this industry-leading position. We are well ahead of our peers in this regard, and we've committed to maintain that position with our future activities. The Cooper Energy net 0 or carbon neutral is audited and certified by Climate Active. This is the federal government body responsible for driving voluntary climate action. In addition to the company being certified carbon neutral, our product, gas, is also certified carbon neutral. This allows us to sell carbon neutral gas as an opportunity. This is currently being explored with our customers. The feedback that we have received regarding our net 0 status has been overwhelmingly positive. We believe it makes us a partner of choice. It helps with staff retention and it helps attracting new personnel. Importantly, our carbon-neutral accreditation also gives us benefits in accessing capital to commercialize our discovered gas and to fund further growth. It helped to enable our new larger debt facility with an expanded group of banks and a reduced cost of funds. It also receives a good response from our institutional shareholders and the communities with which we work. Our net 0 position illustrates our commitment to working sustainably. I encourage all shareholders and all observers of Cooper Energy to read our 2022 Sustainability Report. This report provides a good summary of our activities in this area. Our partnership with Canopy in the Coorong has been the foundation of our net 0 position. We expect to make an announcement in the near future, which will further illustrate and underpin our leading position in this regard. At Cooper Energy, we adopt the United Nations definition of sustainable development, which is development which meets the needs of the present without compromising the ability of future generations to meet their own needs. This fits really well with my earlier comments on the need for balance in the energy transition currently underway and the role of gas. As I mentioned at the start of what I said today, our approach to sustainability is to create a long-term investment proposition for our shareholders, and be a long-term valuable contributor to our broader stakeholders in the communities with which we operate. In our 2022 Sustainability Report, we outlined our energy transition strategy. This recognizes the critical role and value of natural gas as the development of opportunities where Cooper Energy has a competitive advantage and can generate value for our shareholders. The approach is built around 3 pillars. Pillar 1, net 0 as an enabler, which we've already achieved and have committed to maintain. Pillar 2, energy efficiency improvement. This is site-based around our existing operating activities. And Pillar 3, new energy technologies, which includes working with our customers and others on initiatives to reduce Scope 3 emissions and non-hydrocarbon energy opportunities where we have an advantage. The momentum built in the last financial year on the back of improving processing rates at the Orbost plant demonstrates the step-change nature of the company's growth staircase. Each step provides the cash flow, and together with the bank debt, the foundation for the next phase of growth. We will be steadily ascending this growth staircase as we progress to sanction the OP3D project and beyond, with the clear potential to realize a tripling of our current cash flow. In addition to what is displayed on this chart, the company is actively progressing other exploration appraisal and development activities within our existing portfolio. Importantly, all of the future gas production projects displayed on this growth staircase are offshore projects and [ they're ] offshore projects administered by the Commonwealth government. The gas production is subject to -- is not subject to state-based gas production legislation. The company is now demonstrating very strong cash generation and is in a sound position to pursue the next phase of growth, as well as undertaking the BMG decommissioning work in a little over a year's time. It's clear that the current supply challenges facing the Southeast Australia gas market will continue. Gas is a vital bridging fuel as the world decarbonizes. In Cooper Energy, we will concentrate on the elements we can control. We are low on the cost curve, as I mentioned. We supply an essential product. We are located close to a market where supply is tight and getting tighter, and we are generating growing positive net cash flows. Against this background, the current Cooper Energy share price does not reflect the company's value. You can expect all managing directors will say that. I do want to make a couple of comments more specifically though, on this. The group today is in a fantastic position, generating strong domestic gas price realizations to a portfolio of high-quality gas customers and with visible near-term and funded growth in both our hubs. Nevertheless, we've seen a public debate around capping gas prices which makes no economic sense at all, and frustration around Orbost processing rates whilst APA operates the plant. We firmly believe we will solve the Orbost processing rate issue once we take operatorship in the next 6 months. We also believe that pragmatism will come through and the right economic decisions will prevail in the public realm to address the gas supply shortfall. In the meantime, the Cooper Energy team will continue to focus on developing domestic gas resource that is close to market and low on the cost curve. Last month it was announced, as the Chairman said, that I've advised the Board of my intention to retire in 2023. My objective has been to ensure a solid foundation with abundant high-value growth opportunities for the next CEO to then add further value and grow the business for the shareholders. In 2020 and '21, we had our challenges. These challenges in large part were due to issues with the Orbost plant operated by APA. Orbost is now owned by Cooper Energy. The company has clear plans to increase the stability and processing rate once we are the operator. Whilst there's no perfect time, retiring in 2023 seems appropriate. I can assure shareholders that until then, the focus is clearly on continuing to improve the performance of the existing assets and grow value. I want to record my appreciation for the loyal support of our shareholders, our lenders and our customers. I acknowledge and thank our employees and contractors for their commitment and efforts during the year. My thanks to my colleagues on the executive leadership team for what has been a year of change and growth. And finally, I acknowledge and thank the Board for their valuable guidance and the support -- and support over many years. In particular, a heartfelt thanks to our Chairman, John Conde, for his guidance and counsel during what has been a transformative year. I look forward to providing you with further updates as the 2023 financial year progresses. On that note, I'll hand back to the Chairman.

Thank you, David. I confirm that shareholders attending today's meeting and wishing to ask a question, provided that it relates to the relevant agenda item under discussion, now have the opportunity to do so. Are there any questions or matters that you would like to discuss on anything that has been said, or the formal part of the business that is yet to come. And to ask a question, please hold up your blue voting card. And when I acknowledge you, please state your name and ask a question and someone will bring you a microphone, I believe. So while you're just thinking -- I see one question is ready to go. We did have one question prior to the meeting from a shareholder, which I will answer, from Mr. [ Pal Thot ]. If I can read the question: whilst much has been achieved, the share price has languished, it is now at a level similar to 5 years ago. Earnings per share have fallen significantly. Does the earnings per share figure in the annual report reflect a full year's contribution from the APA assets acquired? Two, would final completion of Phase 2b have any significant impact on earnings per share? And three, what is the likelihood of obtaining a drilling rig during the winter of 2025? If I can just answer those 3 questions from Mr. [ Pal Thot ]. First, do the earnings per share figure in the annual report reflect a full year's contribution from APA assets? No, they don't. Orbost was acquired in July 2022. Would final completion of Phase 2b have any significant impact on earnings per share? Yes, we believe so. And of course, we hope so, because it will include the commissioning of the solids removal package, and that should reduce the frequency of absorber and polishing unit cleans. And therefore, less downtime and therefore, it should have an impact on earnings per share over the period. What is the likelihood of obtaining a drilling rig during the winter of 2025? The answer is good. We have continued to plan for OP3D. Today's announcement of the gas sales agreement with AGL is an important part of that planning. And we are in discussions with others regarding rig collaboration, and we expect that the chances of drilling in the time frame that has been queried, winter 2025, are good. So that's answer to the written question. Sir, your question? Oh, sorry, I didn't see the mics. Yes, please come to a mic and...

Greetings. I want to revisit the question of demand, if I may. There's been quite a lot said today about how you're expecting demand to continue at a high level over the next 7 or so years up to 2030. And -- but at the same time, we also have 3 energy scenarios that have been modeled in Victoria's gas substitution road map. And they -- in all 3 scenarios, show gas use collapsing by more than half from 2020 to 2030. So has Cooper assessed the potential impact of Victoria's gas substitution road map on the planned new developments. And if this assessment has been done, is this to be disclosed to shareholders?

I'll say a couple of things, and then I'll ask David Maxwell to say a couple of things. I think this is -- some of those plans and projections are behind what we've both mentioned this morning. We feel that there's a lot of focus on energy, but less focus on having that energy available to keep the lights on when the renewable sources are not producing. And so it's not a simple like-for-like 7-megawatt wind generator doesn't -- or 100 of them don't replace one unit of a coal-fired power station because the wind is only available about 30% or 40% of the time and you need to firm up the rest of the capacity from other sources. And what we see is pressure to close coal-fired generation, and therefore to find firming capacity. You can't do with batteries, biggest battery in Victoria -- biggest battery in Australia at present is in Victoria, 700-megawatt battery. That means that after an hour, its 700 megawatts have got to be recharged. So that might stand in for one 600-, 700-megawatt unit for an hour. But after that, you've got to have another battery. So the practical consequences of decarbonizing, which we all want to see, means there's got to be firming capacity. And we see, we have great confidence that an important source of that firming capacity will be gas, but I don't have precise figures to recite. I'm sorry.

Thank you very much for the question. I'll answer it from 2 perspectives. The forecast that I think you're referring to was the Victoria government. And I probably wouldn't call it a forecast, I would probably call it an aspiration. And we haven't seen a reduction in gas use in Victoria in the last couple of years. But it is an aspiration. It is what the Victorian government has set out as a plan. And the forecast that we showed on the slides was 1 of 4 scenarios that AEMO have looked at. And under all scenarios, gas at least holds in terms of absolute demand through to 2030, 2035. The scenario -- the aspirational scenario, as I've referred to it, that Victoria has out there is included within the 4 scenarios, as I understand it, that AEMO for all of Eastern Australia is looking at. The other thing I would say is that we don't view the gas market as one state. We view -- it's an integrated system, and it's connected, South Australia, Victoria, New South Wales and Tasmania. And the -- what we have done, we have tested our plans against the 4 AEMO scenarios, a subset of which within that would be the Victorian scenario. And we've selected one of the scenarios to present, but our plans stand up alongside each of the 4 scenarios that AEMO has analyzed.

So to be clear, you have done a formal assessment then against that particular aspiration?

We have done a formal -- we've done an assessment against the AEMO, 4 AEMO forecasts, not specifically just against Victoria, because the 4 states are integrated, and we view it all as -- we view the 4 states as one market.

And if that aspiration does come to pass what impact would that have?

On our business, I think the impact, frankly, would be negligible. As we showed, there is a significant gas supply shortfall. And we are at the low end of the cost curve, and it's the lowest cost gas that gets developed first and the gas that's closest to market. So I think that in the next 10, 15, 20 years, the impact on our business would be negligible. Where if there was a significant reduction in demand, it would be more likely those longer-term resources, Coal Seam gas possibility of imported LNG gas out of the Beetaloo Basin, which is more expensive and more longer dated that would be impacted, not that as close to market.