QPM Energy’s financials to surge after locking in transformational energy terms

QPM Energy signs off on agreements reducing its annual fixed charges by 83%
Changes could improve financial performance by >$30m
This will support acceleration of the company’s gas production growth plans

Special Report: QPM Energy can expect a significant improvement in profitability after locking in commercial terms with the Townsville Power Station and North Queensland Gas Pipeline to reduce annual fixed charges by a massive 83%.

Highlighting just how much of an improvement the changes could deliver in the future, the company pointed out that it would have improved its FY2024 financial performance by >$30m.

QPM Energy (ASX:QPM) adds the binding agreements ensure it will be financially robust enough to accelerate its gas production growth plans.

Its Moranbah gas project in Queensland’s Bowen Basin currently captures 28-30 terajoules per day of waste mine gas (methane) from coal mines and supplies it to the Townsville Power Station (TPS), a peaking gas plant that operates for three to seven hours per day during peak morning and evening periods when electricity prices are at their highest.

Updated agreements

The 10-year agreement with RATCH Australia Corporation (RAC), the owner of the TPS, covers the dispatch rights for 100% of the capacity of TPS’s 160MW gas turbine generation unit when existing arrangements expire.

This allows QPM to supply gas to the power station and dispatch the electricity generated into the National Electricity Market.

Likewise, the 10-year deal with the North Queensland Gas Pipeline (NQGP) covers gas transport and storage services on the NQGP, which links the Moranbah project to the TPS.

“Finalisation of the binding agreements with two of our key partners, RAC and NQGP, is a significant derisking event for our business,” chief executive officer David Wrench said.

“The financial benefits expected to flow on from these agreements are now locked in and we look forward to the commencement of these new contracts from July 2025.”

The strategy

With the introduction of more variable renewable generation to the National Electricity Market, the mismatch between the timing of renewable generation and demand – particularly during late afternoon and early evening as solar generation falls away and household electricity demand increases rapidly – has resulted in big swings in pricing.

This could become more pronounced in the coming years as gas supply for peaking power continues to decline amidst rising demand.

To capitalise on the strong market prices during these times, QPM plans to develop additional gas-fired power generation capacity that will be dispatched to provide support to the market.

This article was developed in collaboration with QPM Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.