Strike signs Walyering farm-out

Strike Energy has signed an agreement with ASX-listed Talon Petroleum, which will begin drilling the Walyering appraisal well in the Perth basin next year.

Talon Petroleum, based in NSW, will free carry Strike through the first $6 million of a proposed $9 million in costs related to drilling, geological and geophysical studies to earn a 45 per cent stake in the Walyering development.

The joint venture will be managed by Strike.

The South Australian-headquartered company is planning to produce large volumes of domestic gas from its Perth Basin portfolio, which also includes the West Erregulla development.

Strike says it has the potential to benefit from cost savings by adding the Walyering appraisal well into its drilling program.

The company recently contracted Australian Gas Infrastructure Group (AGIC) for $200 million to build and operate West Erregulla’s gas processing facility, which will process an initial 50 terajoules (TJ) of gas per day.

A final investment decision is targeted by the end of calendar 2020, with first gas delivery expected within the six months to December 31, 2021.

Strike managing director Stuart Nicholls said the company had an exciting year ahead.

“Whilst the Greater Erregulla development remains the company’s primary focus, Strike is making the most of this current low-cost environment,” he said.

“Walyering is a perfect example of the value that can be generated through offsetting costs from an operationally concentrated portfolio with geological diversification.”

Mr Nicholls said Talon made an excellent project partner with its chief executive, former Warrego Energy boss David Casey, having been involved in previous operations with Strike including the West Erregulla development.

Strike and Warrego are both 50 per cent owners in the joint venture.

Fellow South Australian company Beach Energy is also looking to develop its Waitsia gas field in the Perth Basin, as part of a joint venture with Japan-based Mitsui & Co.

Shares in Strike Energy were up 5 per cent at 2:40pm AEST to trade at 20 cents.