Strike’s Strategic Shift Raises Questions on Asset Divestments and Growth

Strategic Review Sets Clear Direction

Strike Energy Limited (ASX, STX) has completed a comprehensive strategic review that redefines its role in Western Australia’s evolving energy landscape. Under new leadership, the company is sharpening its focus on vertically integrated gas-fired power generation and upstream gas development, positioning itself as a key enabler of the state’s ambitious energy transition goals.

The review, conducted with the assistance of consulting firm Oliver Wyman, confirms that Strike’s value is maximised by leveraging its strategically located assets in the Perth Basin. This approach aligns with recent policy signals from the Australian Energy Market Operator (AEMO) emphasising the critical need for flexible, dispatchable gas-fired power to support increasing renewable penetration.

Key Projects and Portfolio Realignment

Central to Strike’s refreshed strategy is the delivery of the 85MW South Erregulla Peaking Gas Power Station, currently under construction and slated for completion by October 2026. This facility is designed to provide fast-response generation capacity, stabilising the grid during periods of low solar and wind output.

Alongside power generation, Strike is advancing the upstream development of the West Erregulla gas resource in partnership with Hancock Energy, targeting an initial throughput of 87 terajoules per day. The company is also progressing the Ocean Hill project, a low-cost, fast-to-market gas asset with advantageous pipeline access and minimal processing needs.

In a move to streamline its portfolio, Strike has exited non-core assets including its geothermal acreage and the L7/EP437 Joint Venture with Triangle Energy Ltd. This refocus aims to concentrate resources on projects that directly support WA’s energy transition and offer clear pathways to value creation.

Financial Discipline and Growth Prospects

Strike plans to maintain stable cash flow from its Walyering operations while exploring near-field opportunities to unlock additional value. The company is actively seeking strategic partnerships and commercial arrangements to accelerate exploration at Ocean Hill and Arrino-Kadathinni, aiming to reduce risk and enhance capital efficiency.

With a strengthened balance sheet and a disciplined capital allocation framework, Strike is well-positioned to execute its strategy and contribute meaningfully to Western Australia’s $7 billion energy transition investment commitment. The company’s integrated model offers flexibility to pivot between gas supply and power generation pathways, optimising returns while supporting decarbonisation efforts.

Leadership Confidence and Market Outlook

Managing Director Peter Stokes expressed confidence in the company’s asset base and strategic direction, highlighting Strike’s unique position to provide the flexible generation needed as renewables become more dominant. Chair John Poynton echoed this sentiment, noting the rigorous assessment underpinning the strategy and the company’s readiness to deliver shareholder value.

Strike will engage with the market further during its upcoming June Quarterly Report, offering investors a closer look at progress and future plans.