Strike Energy Advances South Erregulla Project and Upgrades West Erregulla Reserves

South Erregulla Power Project Nears Completion

Strike Energy (ASX:STX) has pushed its South Erregulla 85 MW Peaking Gas Power Project to 86% completion as of 31 March 2026, maintaining its target to be operational by 1 October 2026. The project has achieved a strong safety record with no major health, safety or environmental incidents during this intense construction phase. Key milestones include the full completion of the power station package and the 15 km 132 kV overhead power line, with structural and electrical installation underway at the northern switchyards.

This progress builds on recent momentum, with the project already 82% complete last quarter, and now edging closer to mechanical completion expected in Q2 CY26. The timing aligns with the Western Australian Economic Regulation Authority’s (ERA) finalisation of a 35% increase in the Benchmark Reserve Capacity Price (BRCP) for 2028/29 to $488,500 per MW per annum, a significant boost that enhances the project’s economics and underlines the growing value of dispatchable generation in the SWIS system. This capacity price rise is a strong tailwind for Strike’s new entrant infrastructure in the state’s energy transition, reinforcing the strategic importance of South Erregulla’s role in firming power supply in Western Australia’s grid. The final BRCP jump follows the earlier quarter’s announcement of the price increase to $488,500/MW, which was flagged as a key market development supporting Strike’s project economics 35% Capacity Price Rise.

West Erregulla Reserves Upgrade Strengthens Asset Base

Strike has also reported a material upgrade to its West Erregulla gas reserves, with 2P reserves increasing by approximately 20% to 251 PJ net to Strike. This upgrade follows an independent audit by Miller & Lents and reflects enhanced understanding of the field’s resource quality. The company is progressing a disciplined development pathway for West Erregulla, including ongoing evaluation of third-party gas processing options.

This upgrade builds on the 19% reserves increase Strike announced in March 2026, confirming the field’s scale and strategic value within its Perth Basin portfolio. The reserves growth is a critical underpinning for Strike’s medium-term development plans and potential production ramp-up. The West Erregulla asset remains central to Strike’s growth strategy, with the company aiming to capitalise on the enhanced reserves base to support future gas supply in Western Australia’s tightening market West Erregulla Gas Reserves.

Walyering Production Rises Amid Drilling and Infrastructure Advances

Production at Strike’s Walyering gas field increased to approximately 15 TJ/day following the installation of a second heat exchanger, a significant improvement from 10 TJ/day previously. This infrastructure upgrade, nearing mechanical completion of compression facilities, supports the company’s firm gas sale obligations and enhances operational flexibility.

During the quarter, Strike produced 1.12 PJe of gas and condensate, generating $13.7 million in gas sales revenue at an average realised price of around $7.05 per gigajoule. The company supplemented supply by purchasing 0.75 PJ of third-party gas, illustrating its active management of market dynamics to meet contractual commitments. The Walyering West-1 exploration well was drilled to total depth post-quarter end on 27 April 2026, with formation evaluation underway. The results of this well could materially impact Strike’s production outlook and resource base in the Perth Basin Walyering West-1 Drilling.

Financial Position and Capital Deployment

Strike’s capital expenditure for the quarter totalled approximately $37 million, predominantly allocated to development costs at South Erregulla and Walyering. Exploration spend rose to $5 million, mainly driven by the Walyering West-1 drilling campaign. Despite these investments, the company’s cash and cash equivalents declined 47% quarter-on-quarter to $37.1 million, with total liquidity halving to the same figure due to capital outflows.

However, Strike has secured additional financing post-quarter with $30 million in new secured facilities from Macquarie Bank becoming available in April 2026, including a $13 million tranche A2 facility and a $17 million tranche B1 facility. These funds bolster Strike’s financial flexibility as it advances its development projects and exploration activities.

Market fundamentals remain supportive, with forward indicators pointing to tightening gas supply conditions in Western Australia despite a modest softening in spot prices this quarter. Strike’s strategic positioning in firming infrastructure and resource upgrades align well with these trends, though liquidity management will require ongoing attention as capital deployment continues.