Central Petroleum’s Buy-Back Raises Questions on Future Capital and Debt Strategy
Central Petroleum Limited has announced an on-market share buy-back program of up to 10% of its issued shares, supported by robust cash flows from new multi-year gas sale contracts and existing reserves.
- On-market buy-back program up to 10% of issued shares over 12 months
- 28% revenue increase in second half of FY2025 driven by new gas sale agreements
- Record quarterly operating cash flow of $6.3 million in June quarter
- Buy-back marks company’s first capital return to shareholders
- Plans for sustainable dividend program and accelerated debt repayment
Strong Financial Momentum Drives Buy-Back
Central Petroleum Limited (ASX, CTP) has announced a significant on-market share buy-back program, aiming to repurchase up to 10% of its issued shares over the next 12 months starting September 15, 2025. This move is underpinned by the company’s strengthened financial position, bolstered by new multi-year gas sale contracts and steady production from existing reserves.
In the second half of fiscal year 2025, Central reported a 28% increase in revenue compared to the first half, reflecting the positive impact of its expanded gas sales agreements. The June quarter saw the company achieve a record operating cash flow of $6.3 million, the highest quarterly figure in its history after adjustments for net participating interests and pre-sale funding proceeds.
Strategic Capital Management and Shareholder Returns
Managing Director and CEO Leon Devaney highlighted the buy-back as a milestone reflecting Central’s progress over the past five years. He emphasized that the decision to return capital to shareholders is supported by confidence in the company’s forward cash flows and long-term contracts. The buy-back program is designed to be flexible, with actual share repurchases depending on market conditions, regulatory constraints, and prevailing share prices.
Devaney also indicated that the company is considering additional capital management initiatives, including the introduction of a sustainable dividend program and accelerated repayment of debt. These steps suggest a broader strategy to enhance shareholder value while maintaining financial discipline.
Market Implications and Future Outlook
The buy-back program could represent a meaningful use of capital given Central’s market capitalization of approximately $27 million. For context, repurchasing 5% of shares would cost around $1.3 million, while a full 10% buy-back could approach $2.7 million, depending on share price movements. The company has committed to purchasing shares at prices not exceeding the volume-weighted average price over the five trading days prior to purchase, ensuring prudent capital deployment.
Central Petroleum’s operations remain focused on the Northern Territory, with significant exploration and production activities in the Amadeus Basin. The company is also exploring opportunities in helium and hydrogen, positioning itself within emerging energy markets. The buy-back and potential dividend program signal a maturing company confident in its cash flow stability and growth prospects.
Bottom Line?
Central Petroleum’s buy-back signals growing confidence and sets the stage for enhanced shareholder returns amid evolving energy markets.
Questions in the middle?
- How will market conditions influence the timing and scale of the buy-back execution?
- What are the specific plans and timelines for introducing a sustainable dividend program?
- How might accelerated debt repayment impact Central’s financial flexibility and growth initiatives?
