Join our daily newsletter At The Bell to receive exclusive market insights
- Oil and gas explorer Strike Energy (STX) will apply a non-cash pre-tax impairment, valued at roughly $91 million, to its Cooper Basin assets
- The decision came after a detailed review of STX’s assets in the basin, in accordance with an accounting standard related to exploring and evaluating mineral resources
- However, the Jaws Project will continue to be tested in the immediate future, however, according to the standards, it will be unlikely to recover its carrying value in full
- Moving forward, Strike plans to keep its interest in the permits and will continue to pilot test Jaws
- Additionally, Strike posted its quarterly results today
- The company burnt $407,000 on operating activities over the June quarter but still has over $21.5 million cash in the bank
- Company shares are down 1.28 per cent on the market this morning and are trading for 19.3 cents per share
Oil and gas explorer Strike Energy (STX) will apply a non-cash pre-tax impairment, valued at roughly $91 million, to its Cooper Basin assets.
The decision came after a detailed review of Strike’s assets in the basin, in accordance with an accounting standard related to exploring and evaluating mineral resources.
Strike’s Southern Copper Basin gas project is located 100 kilometres south of Moomba in South Australia. Its main focus is the Jaws Project, which is targeting deep coal seam gas in the Patchawarra formation.
Strike said there is currently no substantive activity or planned expenditure for the Aldinga oil production well or the Mardsen one exploration well, which are located in the PEL95 permit. Additionally, there is also no activity and planned expenditure for the Davenport one well in PEL94.
Jaws Project
The Jaws Project will continue to be tested for the immediate future. However, according to the standards, it will be unlikely to recover its carrying value in full.
This result took into account the current and expected long term market conditions and the pilot test to date.
What’s next?
Moving forward, Strike plans to keep its interest in the permits and will continue to pilot test Jaws, which remains an important step in the research and development activities of the project.
The impairment will be formalised in the company’s 2020 full-year results, which will be released later this year.
In the meantime, Strike posted its June quarterly results today. The company burnt $407,000 on operating activities over the quarter, but still has over $21.5 million cash in the bank.
Some of the quarter’s operating highlights include selecting the Australian Gas Infrastructure Group (AGIG) to own and operate Strike’ gas processing plant at its West Erregulla project in WA.
Additionally, the McGowan Government deemed the project worthy of Lead Agency Status, indicating it’s “a project of strategic importance to the WA economy.”
Strike Energy is down 1.28 per cent on the market this morning and is trading for 19.3 cents per share at 11:21 am AEST.
