Strike’s Growth Hinges on Carnarvon’s Strategic Investment and Shareholder Approval
Carnarvon Energy is set to become Strike Energy’s largest shareholder through a strategic A$88 million equity placement, underpinning key project developments in Western Australia’s Perth Basin. Strike also launches a Share Purchase Plan to raise additional funds, aiming to accelerate production milestones by 2026.
- Carnarvon to acquire up to 19.9% of Strike via two-tranche placement
- Placement priced at A$0.12 per share, a 19.7% discount to recent VWAP
- Strike to raise up to A$10 million through a non-underwritten Share Purchase Plan
- Funds targeted at advancing South Erregulla and West Erregulla projects
- Carnarvon gains board representation and governance rights
Strategic Partnership Strengthens Strike’s Financial Muscle
Strike Energy Limited (ASX, STX) has secured a significant strategic investment from Carnarvon Energy Limited (ASX, CVN), marking a pivotal moment for the Perth Basin-focused gas producer. Carnarvon will invest up to A$88 million through a two-tranche equity placement, acquiring nearly a fifth of Strike’s shares, positioning itself as the company’s largest shareholder. This capital injection is designed to underpin Strike’s development ambitions and support Western Australia’s broader energy transition.
The first tranche, raising approximately A$52 million, will proceed immediately under Strike’s existing placement capacity, while the second tranche, up to A$36 million, awaits shareholder approval expected in mid-September 2025. Concurrently, Strike plans a non-underwritten Share Purchase Plan (SPP) to raise up to A$10 million, with potential oversubscriptions, offering existing shareholders a chance to participate alongside Carnarvon.
Funding Core Projects and Securing Production Timelines
The funds raised will be strategically deployed to advance Strike’s core assets, notably the South Erregulla project, which targets first production by October 2026, and the West Erregulla project, with a final investment decision (FID) anticipated in the second half of 2026. These projects are central to Strike’s vision of delivering reliable and flexible energy solutions that align with Western Australia’s energy needs and transition goals.
Strike’s chairman, John Poynton, emphasized the significance of Carnarvon’s involvement, highlighting the enhanced financial capacity and flexibility it brings. The partnership is expected to accelerate project development, generate sustainable cash flows, and provide contingency capital to capitalize on high-return opportunities within Strike’s portfolio.
Governance and Strategic Implications
As part of the agreement, Carnarvon secures the right to nominate a non-executive director to Strike’s board, subject to maintaining a minimum 10% shareholding. This governance role, coupled with participation rights in future equity offers, signals a deeper strategic alignment between the two companies. However, Carnarvon will be subject to a 12-month standstill period restricting further share acquisitions, ensuring a measured approach to its influence.
The placement price of A$0.12 per share represents a 19.7% discount to Strike’s recent volume-weighted average price, reflecting the strategic nature of the transaction and the capital required to fund the next phase of growth. The escrow arrangements further underline Carnarvon’s commitment to a long-term partnership.
Context Within Carnarvon’s Portfolio and Market Position
For Carnarvon, this investment follows a strategic review prompted by delays in its Dorado offshore oil project. With a strong cash position exceeding A$96 million post-placement, Carnarvon aims to diversify and strengthen its portfolio by backing Strike’s onshore gas assets, which are critical to Western Australia’s energy security. The move also allows Carnarvon to maintain momentum in its exploration activities in the Bedout sub-basin while supporting a peer with complementary assets.
Strike’s ability to access remaining Macquarie financing facilities is also enhanced by this capital raise, providing additional financial certainty as it progresses its development plans. The partnership thus represents a convergence of strategic interests aimed at bolstering Australia’s future energy supply.
Bottom Line?
As Carnarvon takes a significant stake, all eyes will be on Strike’s upcoming shareholder vote and its ability to deliver on ambitious production targets.
Questions in the middle?
- Will Strike shareholders approve the second tranche placement and the Share Purchase Plan?
- How will Carnarvon’s board presence influence Strike’s strategic decisions and project prioritization?
- What contingencies are in place if production timelines at South Erregulla or West Erregulla slip?