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Strike renegotiates gas deal

Orica International also withdraws claim for return of prepayment for gas made under previous agreement

Australian junior Strike Energy has renegotiated the deal which will see it supply gas to Orica International from its Southern Cooper Basin gas project in South Australia.

Strike revealed it had executed the gas supply agreement with Orica after entering into a binding term sheet with the company last month.

It will supply Orica with 64 petajoules of gas and the deal replaces the existing 2014 gas sales agreement between the two companies for the supply of up to 250 PJ.

Orica has also withdrawn a claim for repayment a A$7.5 million (US$5.9 million) prepayment for gas made under the previous deal.

Strike signs gas deal

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“The renegotiation of the offtake agreement is evidence that the external environment is changing dramatically around Strike and that forward gas demand continues to grow with tightening supply,” Strike managing director Stuart Nicolls said.

“The development of the Southern Cooper Basin gas project will provide for a critical supply of gas into the east coast market at a time of significant need.”

As part of the renegotiation of the gas sales agreement, Strike’s existing loan agreement with Orica has been varied to extend the repayment of the A$2.5 million loan made by Orica in 2013 from 15 July 2018 to 31 December 2021.

The renegotiated terms will also only see the loan accrue interest from 15 July next year and also gives Orica the right to convert the loan into Strike shares from 1 September 2018 at a conversion prices equal to the 30-day volume average weighted price but not less than A$0.20 per share.

The renegotiated deal comes a day after Strike secured funding to drill the Jaws-1 well at the Southern Cooper Basin gas project in PEL 96.

Strike expects the well, if successful, will allow it to book a reserve, commit to drilling Jaws‐ 2 and support a final investment decision on the Phase 1 project to support the delivery of gas into the South Australian energy system by the end of 2019.

Strike operates PEL 96 with a 66.67% interest and is partnered by Energy World on 33.33%.