Strike starts sales talks with WA industrial gas user

Sydney-listed Strike Energy has completed its pre-final investment decision gas marketing process and has commenced detailed negotiations with an industrial gas user in Western Australia as part of South Erregulla phase one gas sales process. The negotiations are aimed at establishing a five-year, 20 terajoules per day (TJ/day) binding gas supply agreement.

The gas supply agreement will include a high take or pay clause, which means the buyer will be obligated to either take a certain volume of gas or pay for it. The pricing of the gas will be aligned with current market conditions, and there will be escalation tied to the Western Australian Consumer Price Index (WA-CPI).

Strike plans to disclose further details about the gas supply agreement once it is finalised and executed. The agreement is crucial for ensuring the bankability of the South Erregulla Phase 1 development, it said.

To optimise the value of the South Erregulla Phase 1 development, Strike intends to keep approximately 30-40% of the gas supply uncontracted until closer to the start-up or post-commissioning phase.

Strike has announced a gas acceleration strategy, which focuses on the development of the Walyering, Ocean Hill, and the South and West Erregulla gas fields. The strategy has been awarded lead agency service by the government of Western Australia. The company aims to bring these four sources of gas production online by the end of 2025, starting with Walyering.

Strike will look to exploit its existing 371 PJ of net 2P reserves proven up across the Greater Erregulla and Walyering fields, convert the existing 610 PJe of net 2C contingent resources to reserves and test 275 PJe of new net 2U prospective resources to delineate further gas resource upside.