Oz Strike Firms Up West Oz Gas Agreement
Sydney-listed Strike Energy has agreed with West Australian agricultural, chemical and mining solutions provider CSBP to convert its gas supply option to a firm 100 petajoule gas offtake agreement at 25 terajoules/day for approximately eleven years, it said on August 31.
“This foundation supply agreement supports Strike’s proposed development of Phase 1 of West Erregulla and, in turn, Strike’s strategy of rapid cashflow generation from the project so as to assist in financing and reduce the cost of capital of a larger expected Phase 2 development,” the company said.
Strike said that the agreement has a narrowing window delivery mechanism for first supply that will allow it to deliver all of its volume from day one, post commissioning. “The option-agreement pricing model has been amended to a fixed price with annual escalation, which simplifies the agreements and supports both the delivery of material free cashflow from West Erregulla’s projected Phase 1 gas production and Strike’s return expectations,” it said.
The offtake agreement is subject to a final investment decision on the West Erregulla project being taken which will enable the delivery of 25 terajoules/day to CSBP expected to start in H1 2022.
Strike is partnered at West Erregulla with fellow Australian explorer Warrego Energy in a 50:50 equity split. Earlier this year, West Erregulla gas project was awarded lead agency status in Western Australia by the premier and minister for state development, jobs and trade. Lead agency status is awarded to resource and infrastructure projects where the proposed investment is significant or of strategic importance.