Strike signs firm gas offtake agreement from West Erregulla

Strike Energy Ltd. has signed an agreement with Wesfarmers subsidiary CSBP to convert its gas supply option to a firm 100 petajoule gas offtake arrangement at a rate of 25 terajoules/day over a period of 11 years.

The gas supply will come from Strike’s proposed Phase 1 development of West Erregulla field in the onshore North Perth basin of Western Australia. The gas supply will provide cash flow to assist in financing and reducing costs of capital of the expected Phase 2 development program.

The agreement with CSBP will enable Strike to deliver all of its volume from the first day following commissioning completion.

The original option pricing model has been amended to a fixed price with annual escalation. The arrangement simplifies the agreements and supports both the delivery of material free cash flow from West Erregulla’s Phase 1 production and Strike’s return expectations, the company adding that it now has a solid platform to secure a high-quality financing solution for the construction program.

The offtake agreement is subject to a final investment decision on the West Erregulla project, but it is expected that gas deliveries will begin during first-half 2022.