Amplitude Energy signs long-term gas deal with AGL
Amplitude Energy (ASX:AEL) shares jumped as much as 6% on Friday before closing up 1.45% at A$1.74 after the gas producer signed a binding long-term supply deal with AGL Energy. Under the agreement, Amplitude will sell 20 petajoules (PJ) of gas to AGL over four years, with the first supply targeted for the second half of 2028. For a stock that was battered in late March after a disappointing drilling result at the Isabella well, this is a welcome piece of good news. But while the headlines are positive, investors need to understand one key detail before getting too excited: the deal only comes to life if Amplitude can actually find and produce the gas.
Why the AGL Deal Matters for Amplitude
At its heart, this is a simple supply contract. Amplitude will deliver around 5PJ of gas per year to AGL for four years, with the price linked to the oil market. If oil prices hold up, Amplitude earns more. If oil drops, the deal earns less.
What makes the deal important is who is on the other side and what it adds to Amplitude’s growing order book. This is the second foundation agreement signed for the East Coast Supply Project (ECSP) in the past six weeks. In early March, Amplitude and joint venture partner O.G. Energy signed a 30PJ deal with EnergyAustralia. With AGL now on board for another 20PJ, the total contracted ECSP volume is up to around 50PJ before a single well has been fully appraised. That tells you two things: East Coast gas buyers are worried about supply, and they trust Amplitude to deliver.
AGL has also been a customer of Amplitude for years, going back to the Sole Gas project. That long-standing relationship makes this renewed commitment more meaningful than a one-off contract.
The Catch: Drilling Has to Deliver First
Here is where investors need to be careful. The AGL deal is binding only if Amplitude’s current drilling program finds enough gas to support it. After the Isabella well came up short in March, the weight now falls on the two remaining wells, expected in the second half of 2026.
First gas is also a long way off. We are talking late 2028, which means more than two years of waiting, spending, and drilling before a single dollar of revenue shows up from this agreement. If the next wells disappoint, the contracted volumes may not be honoured in full, and the stock could take another hit. This is an exciting deal on paper, but the market will want to see proof on the ground.
The Investor’s Takeaway
In our view, this deal does two things. It gives the stock a floor by showing that a second top-tier customer believes in Amplitude’s story, and it sets up a stronger earnings base from 2028 if everything goes to plan. For investors already holding AEL, the news supports staying the course. Back-to-back foundation agreements with AGL and EnergyAustralia give real protection on the downside.
For new investors, we believe patience makes more sense. Waiting for the next drilling update before stepping in is the sensible play, because the true value of these contracts depends entirely on what comes out of the ground. With more drilling ahead, there will likely be better entry points.
