Shares of Amplitude Energy Ltd (ASX: AEL) have seen a significant increase over the past year, rising by approximately 34.09% to around $2.95 each. This growth reflects the company’s robust performance in the gas and oil sector, particularly in the domestic market of Australia. The firm is actively engaged in the discovery and commercialisation of gas from the Otway and Gippsland Basins in Victoria, as well as participating in onshore oil production in the Cooper Basin of South Australia.
Analysts have expressed optimism about Amplitude Energy’s future, noting that the company is well-positioned for further growth. A recent report from Bell Potter has highlighted key factors contributing to its positive outlook, even after the substantial rise in stock price.
Record Revenue and Strong Performance
Bell Potter identified record revenue as a crucial driver for Amplitude Energy. The report emphasized that the company delivered better-than-expected production results, particularly due to the strong performance of the Orbost facility and elevated gas prices, which offset the natural decline in field production.
Key insights from the report include:
– **Orbost Outperformance**: The Gippsland production facility is operating above its nameplate capacity, with approvals in place for further throughput increases.
– **Otway Production Decline**: The expected natural depletion in production from the Otway Basin has been acknowledged, impacting overall output.
– **Growth Project Advancements**: The East Coast Supply Project (ECSP) is progressing towards drilling and a final investment decision, with expansion anticipated in the near term.
– **Rising Gas Prices**: Realised gas prices are expected to increase by approximately 20% next quarter, driven by new contracts and indexation.
– **Improving Financials**: Amplitude Energy has seen a sharp reduction in net debt, bolstered by strong operating cash flow and an equity raising.
The report also projected earnings per share (EPS) adjustments for the upcoming fiscal years: FY26 is expected to increase by 4%, FY27 by 41%, and FY28 by 38%. These changes are primarily linked to the company’s strong leverage to anticipated higher gas prices.
Future Price Targets and Investment Insights
Based on Bell Potter’s guidance, the price target for Amplitude Energy shares has been raised to $3.40 per share, up from a previous estimate of $3.08. This adjustment reflects an approximate upside potential of 15.25% for investors.
The company’s conventional gas assets are crucial for supplying the east coast market of Australia. Enhanced production capabilities at Orbost may further improve near-term output, while contracted prices are projected to strengthen due to indexation and new sales agreements. In the medium term, the ECSP could significantly boost production starting in 2028, leveraging a portfolio of low-risk wells linked to existing pipeline and processing infrastructure.
As investors consider their options, it is essential to evaluate the landscape. According to financial expert Scott Phillips from the Motley Fool, while Amplitude Energy shows promise, he has identified five other stocks that may represent better investment opportunities at this time.
In summary, Amplitude Energy’s strategic positioning and strong market fundamentals have contributed to its impressive share price increase over the past year, with analysts suggesting that further growth is likely on the horizon.
