Thank you for standing by, and welcome to the Amplitude Energy Limited Q2 FY 2025 Quarterly Report Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Jane Norman, Managing Director and Chief Executive Officer. Please go ahead.
Good morning. This is Jane Norman, Managing Director and Chief Executive Officer at Amplitude Energy, and I'm joined this morning by Chief Financial Officer Dan Young and our Chief Operating Officer Chad Wilson. This morning, we released our December FY 2025 Quarterly Report, and I will start with my take on the quarter before opening the call for questions. Q2 was another solid operational quarter for Amplitude Energy, building on the successes of Q1, and pleasingly, this is reflected in our financial performance. We maintained production in August at much higher rates than the prior years, with record production for August and the company overall in the first half of FY 2025. Total production averaged 72.5 terajoules equivalent per day for the quarter and 73.5 terajoules equivalent per day for the half, up 21% on the first half of FY 2024.
We continue to set operational records at Orbost, and our ability to predict and manage the sulfur phase issues at the plant is becoming more sophisticated. We have made a number of additional incremental initiatives planned at Orbost for the current half, and we're excited about the potential for further production improvements. The production improvements are showing through to our financial performance, and we are pleased to report a second consecutive quarter of record revenue, spot gas sales, and average realized gas prices. Sales revenue for the quarter was AUD 67.9 million, up 3% on the record set last quarter, and AUD 133.7 million for the first half of FY 2025, up 26% on the corresponding period in FY 2024. The highlight of the quarter was our spot sales and trading performance, with a new record of 1.9 petajoules of gas sold into the spot market.
Our commercial team commenced spot sales into the Sydney market during the quarter, generating additional margin relative to sales into the Victorian market alone. We were able to achieve an average price with spot sales of over AUD 12.70 per gigajoule during the quarter, translating to around AUD 10 per gigajoule for our average realized gas price overall, a new company record. Pleasingly, our incremental revenue translated into good cash generation, and we reduced our net debt by over AUD 25 million, or 9% over the quarter. Turning to growth, progress on the East Coast Supply Project continues, with Amplitude undertaking detailed engineering and ongoing discussion with potential domestic gas customers and potential joint venture partners.
The ACCC's December 2024 Interim Gas Report again highlights the need for new, local, and affordable gas supply into the southeastern Australian gas markets, with the East Coast Supply Project ideally placed to leverage existing infrastructure and bring gas to market in the shortest possible timeframe. Throughout this quarter, we have focused on our four business priorities for FY 2025, and I will briefly touch on each one of these now. Firstly, to production performance. Orbost's production averaged 60.7 terajoules per day for the quarter, or 5.6 petajoules in total. Continuing its strong performance from Q1 over the half, Orbost produced 61.5 terajoules per day, an increase of 30% on the corresponding half in FY 2024. Orbost achieved gas production of above 66 terajoules per day on nearly half of the days during the second quarter, and around 25% of the days achieved the nameplate capacity of 68 terajoules per day.
Production was lower in October than the other two months, primarily due to the replacement of the media in the polisher unit. The polisher achieved a record runtime of 169 days up to that point, compared with 130 days in the prior run. In addition, a record absorber runtime of 91 days was achieved over the quarter, compared to the typical absorber runtimes of 12 to 19 days in FY 2024. Absorber cleaning times continue to improve, with cleaning durations now regularly below eight hours. The fastest absorber clean on record was recently completed in less than six hours, with peak gas rates restored in less than 20 hours. We'll talk more about the impact of this on costs of the absorber cleans with our results next month.
An additional important point to note is that these cleaning durations allow us to meet gas customer nominations on the day of an absorber clean without the need to make spot gas purchases. Further Orbost improvement initiatives are being progressed to improve the reliability of the Orbost plant and maximize production rates. In the current half, we expect to undertake further trials of chemical clean in place for the absorbers, together with alternative absorber packing material and a new type of polisher media. Some of this work will be incorporated into the Orbost plant maintenance shutdown in March this year. In the Otway, production at the Athena Gas Plant averaged 10 terajoules per day. Besides a minor outage of power supply in December, the plant achieved no reliability loss during the quarter.
We are planning work to reestablish communications through the CHN umbilical cable in February to allow radio well cycling operations to resume, having been disrupted for the last two months. Our second FY 2025 priority is to progress the East Coast Supply Project. We continue to move forward with the East Coast Supply Project, which maximizes the use of existing offshore and onshore Otway Basin invested infrastructure to bring much-needed new gas supply to the southeast Australian. Our intention is to develop three gas fields as part of this project, including the existing Annie discovered resource, the highly prospective Juliet Field, which sits under the existing CHN pipeline, and the large Isabella Prospect, which will be drilled in conjunction with the adjacent Elanora Field. As we've previously announced, we have secured the Transocean Equinox rig as part of a consortium agreement with three other operators.
Amplitude Energy is committed to at least one firm well within the consortium agreement, with options to drill additional subsea exploration and/or development wells. During the quarter, Amplitude Energy continued with detailed planning and engineering for the project. Multiple contracts were awarded to progress with the drilling of a firm well in FY 2026, with flexibility maintained to execute the three well program. Subject to the progress on its current work program, the Equinox rig is expected to arrive in the Otway region by the middle of calendar year 2025 and commence work on our committed well in late calendar year 2025. This timing remains subject to a number of variables. The company continues to engage with several gas customers regarding foundation contracts for the East Coast Supply Project and project funding, which may include prepayments.
The project is expected to be funded from a range of sources, including organic cash generation, customer prepayments, and our newly enlarged and extended bank debt facility. We also continue to engage with our joint venture partner and will update the market when the program has been agreed. To manage project risk and funding, Amplitude Energy does not intend to pursue a three well East Coast Supply Program without a partner. Our third priority is to increase realized gas prices through increased exposure to spot and peaking product opportunities. We sold a quarterly record of 1,928 terajoules of gas from Orbost into the spot market over the December quarter, the equivalent of 21 terajoules a day, up 38% on the September quarter. This was made possible by Orbost's improved performance and lower contractual customer gas nominations during the traditional late spring/early summer shoulder period.
During the quarter, we commenced sales from Orbost into the Sydney spot market, in addition to the Victorian market, increasing our sales margin in the process. We made 24.5 million spot gas sales over the quarter in total and an average price of over AUD 12.70 per gigajoule. This helped us to achieve an overall realized gas sales price across both basins of a record AUD 9.98 per gigajoule for the quarter, up 6% on the September quarter. Our average realized gas price for the first half of FY 2025 was also 15% higher on the first half of FY 2024. Our average realized gas prices should continue to rise as annual CPI increases of 2.8% flow through our contracted book of sales from the 1st of January this year. Fourth and finally, we continue to drive further cost and emissions reductions through continuous improvement and efficiencies.
Our continuous improvement program has identified and started executing initiatives that build on the cost-out successes achieved in FY 2024. Our intent is to keep identifying opportunities to extract additional margin for our gas sales, reduce costs and waste, and improve productivity. As we have discussed in the past, our identified opportunities include Orbost's sulfur use opportunities, seeking to convert a costly waste disposal stream into a source of potential revenue, as well as contributing to the local agricultural economy. Our work with the Gibson Agricultural Group to trial the effectiveness of the sulfur byproduct from Orbost found that our sulfur was at least, if not more effective in improving soil microbial activity and plant growth than commercial sulfur alternatives. We're engaging closely with the EPA Victoria for approvals of an identified beneficial use opportunity and to define future pathways for commercialization.
We'll have more to say on the continuous improvement program and expenses in the February half-year results. However, we are pleased with how we are tracking relative to our production expense guidance. So, to summarize, Q2 was another solid quarter for Amplitude Energy, building on the success of Q1. We produced 72.5 terajoules equivalent per day at the group level and around 61 terajoules per day at Orbost over the quarter. We continue to see improvements at Orbost with record absorber and polisher runtimes, fast cleaning times, and generally more predictable operations. Record spot sales volumes into the tight East Coast gas market are significantly improving our average sales price and margins. Revenue has materially stepped up on prior quarters, and net debt is declining from its peak in Q1.
Preparations for the East Coast Supply Project continue, and we look forward to releasing further details on the project in coming months. As we look to the remainder of FY 2025, we will continue to focus on the production performance and margin expansion across our portfolio. We are ahead of our target to achieve an average group production exit rate of more than 70 terajoules equivalent per day by the end of FY 2025. Followers of Amplitude will know we have upgraded production guidance during Q2 to between 65 terajoules and 72 terajoules per day, and we will look to tighten our production guidance range during this half of the financial year, recognizing that we have maintenance shutdowns scheduled at both of our gas plants in the second half.
Last quarter, we spoke about our debt levels peaking after the final deferred acquisition payment to APA in July 2024 and the final BMG wells decommissioning payments. I'm pleased with our level of debt reduction over the December quarter, particularly considering we are carrying all the East Coast Supply Project CapEx on a sole basis for the time being. Together with strong underlying cash generation, Amplitude's new debt facilities maximize our liquidity and funding flexibility over the medium term, particularly during the East Coast Supply Project exploration and development phase. The growth strategy and investment proposition for Amplitude remain compelling, and there remains deep value within the business that we will look to capitalize on. I would now like to open the line for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Alistair Rankin from RBC Capital Markets. Please go ahead.
Good morning, Jane, Dan, and Chad. Well done on another good result. Just my first question is on the East Coast Supply Project. Is there a deadline by which you need to inform the rig operator or the consortium on taking those optional drilling slots?
Hi, Alistair. Thanks for the question. We have a number of options we can call over the next 14 months or so, which gives us flexibility on the drilling program. But of course, we are looking to lock that in as soon as we can and as soon as we have the new joint venture partner in place.
Okay. Understood. Just a second, one on that EPA Victoria timeline with respect to the sulfur fertilizer. Just do you have a, yeah, a rough timeline on when you'll get an outcome from EPA Victoria? And then just as a follow-up, roughly, do you know what the overall sort of cost benefits might be that you can see from the sale of that fertilizer product?
I think the work with the EPA is going to continue over the next six to 12 months. And in terms of the financial impact, it does depend on that EPA outcome. The minimal improvement we'll see is not having to pay for this to be disposed of as a waste, but ideally, we'd like to sell it to someone, and we'd like that customer to pay for the transport cost as well. So if all of that was achieved, it would be circa AUD 1 million a year in terms of revenue and reduced waste costs.
Okay. That's clear. I'll leave it there. Thanks, guys.
Thanks.
Thank you. Your next question, it comes from Dale Koenders from Barrenjoey. Please go ahead.
Morning. Just a quick question on how are you thinking about runtimes for Orbost on a go forward basis? I think Chad's previously said low 60 TJs a day on average for an annual year with maintenance and the better runtimes. Is that still the right target, or are you actually getting better outcomes than that?
Yeah. Thanks, Dale. Yeah, I think for right now, that's probably the right target. We've seen very good improvement in reliability at the plant, and what we're looking to do to move above those targets is to really start to creep the capacity of the plant. So that work is still underway, and that's some of the work that we'll be conducting over the next year.
How far can capacity creep when you've got, I think, line limitations at around 70 TJs a day?
Yeah. About probably 2 TJ-3 TJ a day.
Okay. In terms of the upcoming maintenance, can you sort of better explain how long downtime and when that's planned for?
Currently, the plan is for seven days of plant outage.
On both plants, sorry?
Seven days on Orbost and three days at Athena.
Okay. And then final question, just for Jane and Dan, just sort of wondering, what's the cost exposure you have to those two options? Are you comfortable that you've sort of got the balance sheet set for the one firm well and the two options are really pending a partner, or is there still a risk in sort of funding the potential CapEx commitments that you have?
Yeah. The funding for the ECSP, the funding plan for the ECSP now is unchanged from what we've discussed over the last year or so, those three pools of capital we've talked about. And yeah, we're able to meet those funding requirements, whether we're doing that on a sole basis or from those three pools of capital as we anticipate with a three well program with a partner.
Okay. Thank you.
There's no cost for the option wells until that call, so that's not an exposure.
Okay. So they're free options, Jane? Unless called?
That's built into the rig program.
Okay. Thank you.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question, it comes from Josh Farr- Jones from Canaccord Genuity. Please go ahead.
Hi, guys. Happy New Year. Just a quick one around Pertamina. How hopeful are you of getting an outcome there? I see you've stated that arbitration has to commence before the end of this financial year.
Yeah. Thanks, Josh. So the Supreme Court of Victoria has ordered the parties to attend mediation, and that must be completed no later than the 30th of June. And we will obviously progress that process as effectively as we can, and we'll update the market when there's further information on the dispute and the terms of any settlement.
Great. And you also mentioned that you're going to have announcements around the East Coast Supply Project. Will that include the CapEx estimates? How are they coming along?
Yes. We'll provide more details around the costings when we can announce the firm program. But the best way to think about the project is really in two parts. There's a drilling program that's going to take place this calendar year and into 2026. And then on success and gas discoveries, we'll move into the development phase and tie in those three new wells into the existing offshore pipeline. So that activity will start later in 2026, and then gas will come online in 2028. So the spend is spread over around three, three and a half years, which is very positive in terms of being able to support the CapEx from organic cash generation.
Thank you.
Thank you. Your next question, it comes from Stuart Howe from Bell Potter Securities. Please go ahead.
Morning, Jane and Dan. Just follow-ups on two questions already asked. The maintenance shots at Orbost and Athena, when exactly are they scheduled to take place?
Yep. So both are in March, middle of March.
Okay. Great. And then on the East Coast Supply Project and the capital numbers, is it fair to say that you'll be in a position when you sanction that first well this fiscal year to provide capital estimates on that program, and then there'll be further details on the development phase down the track? Is that sort of how you're thinking about, I guess, communicating those capital outlays?
Our objective here, Stuart, will be to give you as much clarity as we can when we confirm the program. So we'll talk about the whole program at that time and give you that clarity, including funding as well.
And just perhaps follow up. Jane mentioned in her comments earlier around a new JV partner. Just, is there any further you can provide in terms of, I guess, timing and what you're expecting there with Mitsui? Just any other comment?
Yeah. Stuart, we're limited in what we can say because ultimately, this is Mitsui's process. But we are increasingly confident. We've been supporting their sale and exit for the last two and a half years in terms of a data room on the growth assets because they haven't participated in the front-end engineering design work. So we've been providing that to interested parties, and we believe they're getting close. So yeah, we remain confident.
That's great. Thanks, guys.
Thank you. There are no further questions at this time. I'll now hand back to Ms. Norman for closing remarks.
Great. Thanks very much to everyone for joining us today. We're really pleased with the progress so far in FY 2025, in particular the revenue improvement and increased exposure to spot sales and the impact that's having in terms of bringing net debt down to strengthen the balance sheet before we go into the growth project. So thanks again, and look forward to speaking in a few weeks' time on the 25th of February for our half-year results and catching up on the roadshow afterwards.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.