Central Petroleum Limited (ASX:CTP) reported its FY2026 results on 17 September 2026, highlighting improved operating performance from its producing gas fields, stronger realised gas pricing and progress on its Palm Valley drilling program. The company reported sales Revenue of $44.7 million, underlying EBITDAX of $17.0 million and positive net Operating Cash Flow of $15.6 million before Capital Expenditure and after net interest payments. The results come alongside ongoing efforts to expand production capacity, strengthen commercial certainty through new gas contracts and develop exploration opportunities across additional Australian basins.

FY2026 Results Highlight Improved Gas Margins and Operating Cash Generation

Central Petroleum’s FY2026 performance reflected stronger operating margins despite lower production volumes across some categories. Sales revenue increased 3% compared with the prior year, supported by a 14% increase in the average realised gas price. Operating Margin excluding Depreciation increased to $4.96 per gigajoule equivalent, reflecting improved pricing conditions and operational performance.

The company reported underlying EBITDAX of $17.0 million for FY2026, while net cash flow from operations after net interest payments reached $15.6 million. Central ended the financial year with a cash balance of $20.41 million after investing $11.2 million into new exploration acreage.

Statutory results reflected exploration portfolio changes and appraisal-related expenditure. Central reported a statutory net loss after tax of $4.9 million after recognising a $5.9 million Impairment charge related to exploration portfolio rationalisation and $5.7 million in exploration and appraisal costs, including preparations for Palm Valley drilling.

Key financial metrics included Natural Gas sales volumes of 4,261 terajoules, oil and condensate sales volumes of 14,773 barrels and Gross Profit of $15.0 million. Underlying EBITDAX declined from the previous year due to changes in operating conditions and exploration-related activity, although the company highlighted improved operating margins and cash generation from its producing assets.

Palm Valley Drilling Program Becomes a Key Near-Term Growth Driver

A major focus of the latest update was progress on Central Petroleum’s Palm Valley drilling campaign. The PV14 well, the first of a two-well drilling program, commenced drilling in late July 2026, with gas observed and flared during air drilling of the target reservoir.

Central is targeting first gas sales from PV14 in October 2026, subject to successful completion, tie-in, commissioning and satisfactory well performance. The company plans to assess sustainable production capacity after commissioning and an initial production period.

Following completion of PV14 tie-in activities, the drilling rig will move to PV15. If both wells are successfully completed and commissioned, Central expects the wells to increase Palm Valley’s available production capacity and support greater utilisation of existing processing infrastructure. The Palm Valley field has gross joint venture sales capacity of approximately 14 terajoules per day, although actual production outcomes will depend on well performance and field decline.

The drilling program forms part of Central’s broader strategy to increase production from existing Assets while improving utilisation of established infrastructure.

Expansion Into New Basins Supports Longer-Term Growth Pipeline

Alongside its producing operations in the Northern Territory, Central Petroleum has expanded its exploration footprint into additional Australian regions.

During FY2026, the company secured interests in PEP 169 in Victoria’s onshore Otway Basin and Cooper Basin retention leases and exploration permits. Central expects at least three exploration wells to be drilled over the next 18 months across these new areas.

The company also rationalised its exploration portfolio by exiting two Amadeus Basin exploration permits, reducing portfolio Holding Costs and focusing resources on areas with stronger commercial potential.

Central’s broader portfolio includes established production operations in the Amadeus Basin and exploration, appraisal and development opportunities across the Cooper Basin and onshore Otway Basin.

Gas Contracts and Commercial Strategy Strengthen Future Cash Flow Visibility

Central secured new multi-year gas contracts extending from 2026 to 2034, providing increased cash flow certainty and supporting the final Investment decision for two new Palm Valley wells.

The company also completed the final repayment of overlifted gas obligations in May 2026. This is expected to release approximately $7 million per year in future cash flow previously allocated towards repayment obligations.

To support accelerated Palm Valley drilling activities, Central increased its existing Loan Facility by $15 million, providing additional Working Capital flexibility.

The company also implemented its first Shareholder returns program through an on-market share buy-back, acquiring and cancelling 2,185,130 shares and cash-settling 8,552,586 employee share rights during the year.

Risks and Uncertainty Factors

Central Petroleum’s future performance remains dependent on successful drilling outcomes, production reliability, Commodity pricing conditions and execution of its development strategy.

The Palm Valley drilling program represents an important operational milestone, but production outcomes remain subject to successful completion, commissioning, well performance and field decline characteristics. Central has stated that actual production will depend on the performance of the new wells after commissioning.

Exploration activities across the Cooper Basin and onshore Otway Basin also involve geological uncertainty, regulatory approvals, funding requirements and exploration success risks.

The company remains exposed to natural gas market conditions, customer demand, operating costs and capital requirements associated with future development activities.

What to Watch Ahead

Investors may continue monitoring Central Petroleum’s Palm Valley drilling progress, including completion of PV14, commencement of PV15 drilling and the targeted October 2026 first gas sales milestone.

Key areas of focus include:

  • Production outcomes from the Palm Valley drilling campaign.
  • Progress across new exploration permits in the Cooper and Otway Basins.
  • Delivery of benefits from new multi-year gas contracts.
  • Utilisation of existing processing infrastructure.
  • Future exploration and development decisions across Central’s portfolio.

Central Petroleum enters FY2027 with a focus on increasing production capacity, improving operating performance and progressing exploration opportunities. The company’s latest update highlights a strategy centred on strengthening its producing assets while developing additional growth Options across Australia’s gas regions.