Amplitude Energy's (ASX:AEL) stock price seems to have been impacted by market sentiment over the Australian government's proposed gas reservation scheme policy amid weak spot gas prices through the fourth quarter of fiscal year 2026, Euroz Hartleys said in a Thursday note.

The policy uncertainty has overshadowed record daily and weekly production rates at the company's Orbost gas processing facility in Victoria, the investment firm said.

The government's proposal created fears of weaker gas prices due to a manufactured oversupply of domestic gas, with Amplitude warning that the domestic supply obligation would soften the long-term contracts that fund new supply.

Amplitude's "base business is performing exceptionally well given record production rates at Orbost," Euroz Hartleys said, adding that it forecasts continued earnings growth for the company over the medium term from rising term prices and production debottlenecking.

The equity research firm lowered its fiscal year 2026 revenue forecast for Amplitude to AU$287 million from AU$299 million after incorporating lower spot gas prices into its estimates.

Euroz Hartleys maintained a buy recommendation on Amplitude while lowering the price target to AU$3.10 per share from AU$3.54, reflecting an updated risked sum-of-the-parts valuation.

The company's shares gained 1% in recent Friday trade.