Amplitude Energy (ASX:AEL) strengthened its long-term production outlook after securing a foundation gas sales agreement (GSA) with AGL Energy (ASX:AGL) that lifts contracted volumes and supports valuation upside if drilling success continues, Euroz Hartleys said in an April 17 note.
The company will supply 20 petajoules of gas, over four years from its East Coast Supply Project (ECSP), with deliveries starting in the second half of 2028 and pricing linked to oil and market conditions at the time of delivery.
Euroz Hartleys estimates about 80% of expected production is now contracted, assuming 60 terajoules per day of gross output and completion of the remaining ECSP drilling program, including Annie field development and successful appraisal of the high-probability Juliet and Nestor prospects.
The equity research firm noted that the AGL contract differs from the company's earlier Energy Australia agreement, as it is oil-linked and could deliver higher realized prices depending on oil markets over the contract term.
The firm said that multiple foundation GSAs signal strong confidence in the company's drilling program and resource base, and it remains positive on valuation.
Euroz Hartleys kept a buy rating on Amplitude Energy with an under review price target of AU$3.25.
Amplitude Energy's shares plunged 5% in recent Monday trade, while AGL Energy's shares shed 2%.