Strike Energy (STX) Q2 2025 TU earnings summary

Executive summary

• Final investment decision made for South Erregulla 85 MW peaking gas power station, targeting commissioning by October 2026 and moving into execution phase with Macquarie Bank financing.

• Significant gas discovery confirmed at Erregulla Deep; Walyering East-1 identified as a contingent or potential new gas discovery pending further testing.

• Strategic review launched to maximize shareholder value, considering commercialization, asset divestments, and project portfolio optimization.

• No takeover offers received; all ASX obligations will be met.

• CEO & MD Stuart Nicholls departed post-quarter.

Financial highlights

• Q2 FY25 sales revenue was $17.53 million, down 4% quarter-on-quarter, mainly due to planned maintenance at Walyering.

• Average realised gas price increased 4% to $7.34/GJ; condensate price up 1% to $122.16/bbl.

• Exploration and appraisal expenditure rose 70% to $13.34 million, driven by Walyering East-1 drilling and Erregulla Deep-1 testing.

• Development expenditure surged 155% to $11.98 million, reflecting South Erregulla procurement and Walyering 7 drilling.

• Cash and cash equivalents at quarter end: $33.13 million, down 26% quarter-on-quarter; total liquidity down 46% due to transition to new financing.

Outlook and guidance

• South Erregulla project to deliver 85 MW of firming power into SWIS, with operations starting October 2026 and a 21-year life.

• Project NPV8 (pre-tax, unlevered) estimated at $250 million with a 27% IRR, supported by long-term capacity payments.

• South Erregulla Peaking Power Station expected to generate $50–55 million annual revenue over the first five years post start-up.

• Capacity credit pricing in WA is forecast to rise 57% from 2025–26, enhancing project economics.

• Near-term focus on operational excellence at Walyering, ongoing FCF generation, and advancing major projects.