Strike heralds $53m deal with Orica
UPDATE 2.40pm: Strike Energy has struck a gas supply agreement with Orica, which could deliver the oil and gas explorer up to $52.5 million to help it bring it Southern Cooper Basin Gas Project in South Australia into production.
Orica has entered into a binding term sheet for the supply of up to 150 Petajoules of gas to be produced by Strike from it PEL 96 joint venture project with Energy World Corporation.
The two companies described the arrangement as an innovative risk-sharing arrangement designed to facilitate the evaluation and commercialisation of a large prospective gas resource.
PEL 96 is part of Strike's wider Southern Cooper Basin Gas Project in South Australia, which also includes PEL 94 and 95.
To secure its gas offtake, Orica can elect to make up to $52.5 million of gas pre-payments as Strike achieves appraisal and development milestones with the project.
Strike's managing director David Wrench described the deal as a break-out transaction for the company.
"Today's announcement is a win-win for both parties, providing potential gas supply at an acceptable price for Orica while delivering to Strike a material contribution towards the appraisal and development of the project," he said.
Strike said, as project operator, it would begin field activities this quarter.
Orica managing director and chief executive Ian Smith said the agreement had the potential to provide a future new source of gas supply to the company's east coast manufacturing plants at an affordable price.
Strike shares closed up 1.5 cents, or 15 per cent, at 11.5 cents while Orica shares were off 46 cents, or 2.14 per cent, to $21.
