Why fund managers bought into Amplitude Energy after its exploration setbacks

Two failed exploration wells hit Amplitude Energy's share price hard, but managers point to strong core cash generation and rising east coast gas prices.

31 Mar 2026 · 5 min read

East coast gas producer Amplitude Energy has swung between exploration disappointment and share price recovery through 2026. Firetrail Investments' March 2026 Monthly Report described the stock plunging around 40% after its Isabella gas prospect was assessed as non-commercial and the well plugged and abandoned, following an earlier drop in February when the Elanora 1 well also failed to find commercial gas.

Exploration risk against a core producing business

Despite the setbacks, Firetrail used the share price weakness to significantly increase its investment, framing the results as a useful reminder of the risk and difficulty in bringing gas supply to market rather than a reason to abandon the thesis. Yarra Capital Management's February 2026 Monthly Report had already flagged the Elanora disappointment while noting the follow-up Isabella well had intersected gas shortly after month end, a sequence that ultimately did not hold up once further appraisal was completed. Ellerston Capital's February 2026 commentary made a similar point, noting the market reaction to the first well was not unexpected given it carried the highest geological risk of the drilling program.

The core business can generate free cash flow of >$200m per annum for the next 7-8 years against an enterprise value of ~$900m.

— Firetrail Investments, Monthly Report, August 2025

That underlying cash generation is what has kept managers engaged through the exploration setbacks. SG Hiscock & Company's July 2025 Monthly Report detailed record production at the Orbost gas plant, finally reaching nameplate capacity with further upside from de-bottlenecking and the resale of sulphur rather than paying for its disposal. Balmoral Investors used a December 2025 Article to frame the broader macro backdrop, arguing regulators and politicians are increasingly recognising gas as a fuel rather than a transition fuel, supporting higher medium-term gas prices as existing Bass Strait fields deplete.

What managers are watching next

With the East Coast Supply Project's growth ambitions now dependent on the outcome of further appraisal wells, managers are watching whether Amplitude's existing Athena gas plant and Orbost infrastructure can still process third-party gas volumes even if its own Otway exploration program disappoints, alongside the pace of gas price increases as east coast supply tightens.