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Sometimes forewarning isn’t enough to soften a blow. Despite flagging a likely reduction of its RISC-passing gas resource at Walyering back in mid-late July, Strike Energy (ASX:STX) shares fell -6% on Tuesday as the company confirmed the downgrade.
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And that downgrade is bad news for Strike, which is contractually obliged under existing gas supply agreements to keep it flowing; meaning the explorer will now need to purchase gas to supply parties under those contracts.
In a roundabout way, there’s a very Australian irony to that market arrangement. 1P Sales Gas Reserves have fallen from 23.2 Petajoules (PJ) in 2024 to 11.2PJ, while 2P Reserves have fallen from 38.5PJ to 8.9PJ.
Quite a steep drop on both counts, but particularly the latter; the 2P figure accounts for FY25 production, the company wrote. (As if that’s enough to make up for the fairly drastic cutback.)
The company now expects an impairment of up to A$108M when it comes to selling oil and gas; a further $20M punch will be felt when it comes to tax.
It’s another blow for a company that was HotCopper‘s single most discussed stock across forums in 2024; the same year the company drilled a major duster in Q1, which acted, perhaps counterintuitively, as a catalyst for myriad debate.
“Under its current firm Gas Supply Agreements, Strike has approximately 24 PJ of contracted gas that remains to be supplied … a potential shortfall (against the RISC 2025 assessment) of ~9.5 PJ on a 2P basis or ~13 PJ on a 1P basis,” the company outlined.
“To mitigate this potential shortfall (which is expected to start impacting the rate of delivery from late FY26), Strike plans to drill the Walyering West near-field exploration prospect3 and purchase gas on market as required.”
STX last traded at 11.5cps.
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