Strike Energy has been added to the ASX 300 following its quarterly update, confirming it entered the index after a rebalance in September.
At the conclusion of the recent quarter, Strike completed drilling on its West Erregulla gas development, along with pre-front end engineering design (FEED) on Project Haber.
The company finished the quarter with more than $52 million in cash on hand, $16 million in liquid investments and $3 million of secured long-lead items for the proposed Phase 1 gas plant.
Managing director and chief executive officer Stuart Nicholls said the company had a busy quarter as it completed its CY20/21 projects.
“At the end of the reporting period, Strike announced its maiden Perth Basin gas reserve at West Erregulla,” said Nicholls.
Netherland, Sewell & Associates, Inc. (NSAI) has certified 300 PJ 2P and 372 PJ 3P gross gas reserves in the King sandstone alone.
“Reserves booking is sufficient to progress towards the final investment decision (FID) at West Erregulla Phase 1 development, which is a positive outcome and provides a pathway to Strike’s first cashflows.”
The company also increased its economic interest in the West Erregulla gas project to 54 per cent.
Civil works have been completed at Walyering, with rig mobilisation expected in late October, for spud in November.
Strike is preparing to spud the Walyering-5 (WE5) appraisal well upon receipt of the Ensign 970 rig from the Lockyer Deep joint venture.
“In the coming months the company will drill the Walyering and South Erregulla exploration wells, where positive outcomes have the potential to create significant value,” said Nicholls.
In addition, Project Haber is in the pre-FEED stage, with design works being carried out by Technip Energies.
The company plans to undertake a competitive process in quarter four 2021 to seek interest from equity partners to fund the capital requirement, with Strike expecting to retain 30 per cent interest.
Strike expects to complete engineering studies in 2022 with construction commencing early 2023.
Strike’s field operations for the last quarter centred on the production testing at WE5 and suspended other West Erregulla wells, readying them for production operations in 2023.
During the quarter, Western Australian spot gas prices continued to rise to the mid $5.00/GJ range.
Strike reported, “Changes in the WA domestic market dynamics were dwarfed by the activities of a significant tightening in international gas markets.”
The company anticipates that price incentives offered by international markets may lure more gas supply to LNG over dogmas backfill for producers that have the option.
This may mean significant upwards momentum for WA domestic gas prices in 2022.
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