15/04/2021 - 12:00

Strike raising $80m for West Erregulla

15/04/2021 - 12:00

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Strike Energy has entered a trading halt ahead of a planned capital raising to progress its West Erregulla joint development in the Perth Basin.

Strike raising $80m for West Erregulla
A final investment for phase one development of West Erregulla is expected in mid-2021. Photo: Strike Energy

Strike Energy has entered a trading halt ahead of a planned capital raising to progress its West Erregulla joint development in the Perth Basin.

Strike, which is developing the project with Perth-based Warrego Energy, is raising $75 million from an institutional placement and up to a further $5 million under a share purchase plan.

The proceeds will go towards phase one of West Erregulla’s construction works, for which a final investment decision is due mid-2021.

First gas is expected between the end of 2022 and the first half of 2023.

Warrego last year had raised close to $48 million to fund its share of phase one development, which includes increasing West Erregulla's production capacity from 50 terajoules (TJ) of gas per day to 80TJ.

The joint venture also plans to expand the project's gas resource, at the South Erregulla prospect.

Today, Strike said it would direct some of the funds raised towards the development of its proposed 1.4 million tonnes per annum urea fertiliser plant (Project Haber), to be built near Geraldton.

About 250 million shares will be issued under a single-tranche placement, managed by Euroz Hartleys and UBS, and about 16.7 million under the SPP.

The offer is priced at 30 cents per share and represents a 20 per cent discount to Strike’s last closing price of 37.5 cents.

It is expected to boost Strike's pro-forma cash from about $10 million to $90 million (excluding costs related to the transaction).

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