Strike Energy has selected Hancock Energy’s Belisama facility as the preferred processing route for West Erregulla and agreed terms for up to A$30 million in pre-FID funding. Walyering production and reserves also improved, but Strike ended the quarter with A$40.16 million in cash, no undrawn debt and A$188.01 million drawn.
- Belisama selected as preferred West Erregulla processing pathway
- Up to A$30 million Hancock loan remains conditional
- Walyering production rose to 1.13 PJe and revenue reached A$14.08 million
- Walyering 2P sales gas reserves increased to 16.4 PJ
- South Erregulla grid energisation targeted for November 2026
West Erregulla gains a processing route and conditional funding
Strike Energy Limited (ASX:STX) has moved West Erregulla another step towards development, selecting Hancock Energy’s proposed Belisama gas processing facility as the preferred pathway for Strike’s share of future production. The proposed tolling arrangement would provide 43.5 TJ a day of capacity, with a fixed capital charge intended to give Strike greater cost certainty.
The companies have also agreed terms for a Hancock loan of up to A$30 million to fund pre-final investment decision work, including drilling and completing West Erregulla-6, workovers on West Erregulla-2 and -4, and a gradient survey on West Erregulla-3. The funding is not yet unconditional: it depends on executing a gas processing agreement, finalising loan documents and obtaining Macquarie consent, with repayment planned from first gas. Strike is targeting upstream FID in mid-FY28 and first gas in mid-calendar 2029, both forward-looking milestones.
The announcement formalises the same development pathway outlined in Belisama processing agreement, when Strike said Hancock’s facility was its preferred processing partner and proposed up to A$30 million of commercial funding. During the September quarter, Strike also drew A$30 million under its amended Macquarie facility, adding near-term development capacity while increasing drawn debt.
Walyering delivers higher production and reserves
Walyering provided the quarter’s operating lift. Production reached 1.13 petajoules equivalent of gas and condensate, up 14% from the June quarter, while sales volumes rose 11% to 1.90 PJe. Compression helped the field reach production rates of up to 20 TJ a day in late September.
Sales revenue increased 8% quarter on quarter to A$14.08 million, including revenue from purchasing and on-selling 0.78 PJ of third-party gas to meet contracted volumes. The average realised gas price was approximately A$7.15 a gigajoule. An independent review lifted Walyering’s 2P sales gas reserves to 16.4 PJ as at 1 July 2026, after accounting for 5.7 PJ of FY26 production, with FEED work continuing on the Walyering West-1 tie-back.
That reserve figure follows the Walyering reserves upgrade, which incorporated maiden reserves from Walyering West. The quarter’s report does not provide a final investment decision for the tie-back, so the next test is whether FEED can translate the enlarged reserve base into an executable development plan.
South Erregulla approaches grid energisation
Strike’s 85MW South Erregulla gas power project remains targeted for grid energisation in November. Western Power began commissioning the connection assets during the quarter, while construction at the plant reached practical completion and Strike-related construction deliverables were completed after quarter end.
AEMO commissioning and hold-point testing are expected to begin immediately after energisation and take six to eight weeks. Commercial operations would start only after those activities are completed and AEMO grants approval to generate, with the project expected to provide revenue from Capacity Credits and electricity sales. The timing therefore remains dependent on both grid energisation and successful commissioning.
Cash generation is rising, but debt has also climbed
Strike finished September with A$40.16 million in cash and no available undrawn debt, compared with A$46.28 million of cash and A$0.30 million of undrawn debt at June. Drawn debt stood at A$188.01 million, up 19% over the quarter, after the A$30 million Macquarie drawdown. Operating cash flow was negative A$6.16 million, while investing cash outflows reached A$29.84 million, including A$28.08 million for property, plant and equipment.
Capital expenditure totalled approximately A$10 million during the quarter, dominated by A$8 million at South Erregulla. Strike also began assessing interest from data centre operators in South Erregulla’s access to energy, grid, water, fibre and land infrastructure, although the report provides no commercial outcome from that process. The next disclosures will need to show whether commissioning converts the power project into operating cash flow before West Erregulla demands larger development funding.
Bottom Line?
Strike has added definition to its two major growth projects, but execution, conditional funding and a fully drawn debt position leave little room for delays to be costless.
Questions in the middle?
- Will Strike and Hancock execute the definitive gas processing and loan agreements, and will Macquarie provide the required consent?
- Can South Erregulla complete grid and AEMO commissioning on schedule and begin generating its expected dual revenue stream?
- How will Strike fund West Erregulla’s path to the targeted mid-FY28 FID while maintaining liquidity and servicing A$188.01 million of drawn debt?