Strike Energy has made significant strides in its integrated gas-to-power strategy, advancing the South Erregulla Peaking Gas Power Station and securing a major $86 million investment from Carnarvon Energy. The company also confirmed a substantial 180 PJ contingent resource at Ocean Hill, positioning itself strongly in Western Australia's evolving energy market.
- South Erregulla Peaking Gas Power Station 56% complete, on track for October 2026
- Final Reserve Capacity Price set at $360,700 per MW for 2027/28, projecting $31 million revenue
- Ocean Hill 2C Contingent Resource independently certified at 180 PJ
- Carnarvon Energy completes $86 million strategic investment
- Quarterly production steady at 2.21 PJe with $18.8 million sales revenue
South Erregulla Power Project Progress
Strike Energy has reported solid progress on its South Erregulla Peaking Gas Power Station, with construction now 56% complete and a targeted commissioning date of 1 October 2026. The installation of Jenbacher engines is well underway, with 15 of 20 units already on site and operational activities such as the workover of the South Erregulla-1 well completed to prepare for production. This project is central to Strike's strategy to integrate upstream gas production with downstream power generation, aiming to meet growing demand for dispatchable energy in Western Australia.
Market Conditions and Revenue Outlook
The Australian Energy Market Operator (AEMO) has set the Reserve Capacity Price at $360,700 per megawatt for the 2027/28 capacity year. With an awarded certified reserve capacity of 85 MW, Strike anticipates generating approximately $31 million in capacity revenue in the second year of operations, supplementing independent energy sales. While the Western Australian gas spot market softened slightly in the quarter, with prices averaging $6.61 per gigajoule, long-term fundamentals remain robust due to expected demand growth and the scheduled retirement of coal-fired power plants.
Resource Certification and Exploration Advances
Strike achieved a significant milestone with the independent certification of 180 petajoules (PJ) of 2C Contingent Resource at its Ocean Hill project, following detailed seismic survey analysis. Additionally, the company identified substantial prospective resources at Ocean Hill South, enhancing its exploration portfolio. Planning is advancing for the Walyering West-1 well, with a spud date anticipated in mid-February 2026, signaling ongoing efforts to expand Strike's resource base in the Perth Basin.
Financial Strength and Strategic Investment
Financially, Strike Energy demonstrated resilience with total sales revenue rising 3% quarter-on-quarter to $18.81 million, supported by stable average realised gas prices of $7.38 per gigajoule. Capital expenditure increased to $31.75 million, primarily directed towards South Erregulla development. The company’s liquidity position strengthened markedly, with cash and undrawn debt totaling $140.2 million. This financial boost was underpinned by an $86 million strategic placement completed by Carnarvon Energy, alongside a $1.7 million raise via a Share Purchase Plan, providing ample funding for ongoing growth initiatives.
Outlook and Strategic Positioning
Strike Energy is positioning itself at the nexus of Western Australia’s energy transition, capitalising on the increasing demand for reliable, dispatchable power driven by the rise of AI, data centres, and industrial electrification. With its integrated gas and power assets located near the South West Interconnected System load centre, Strike is uniquely placed to supply firm capacity as coal-fired generation phases out by 2030. The company’s forward-looking approach, combining resource expansion with power infrastructure development, aligns with market forecasts anticipating tightening capacity and rising electricity prices in the medium term.
Bottom Line?
As Strike Energy advances its integrated gas-to-power projects and secures strategic capital, the coming year will be pivotal in translating resource potential into market-ready energy solutions amid evolving WA energy dynamics.
Questions in the middle?
- How will the timing and completion of South Erregulla impact Strike’s revenue trajectory in FY27 and beyond?
- What are the exploration risks and upside potential associated with the newly certified Ocean Hill and Ocean Hill South resources?
- How might fluctuations in WA gas spot prices and electricity demand affect Strike’s operational and financial performance?