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There’s one point of speculation generating chatter on Monday when it comes to Western Australia-based energy smallcaps.
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Strike Energy (ASX:STX) has issued a trading halt relating to an equity raising, and Carnarvon (ASX:CVN) has done the same around news of a “strategic investment.”
In between the lines, market watchers and commentators alike have openly speculated whether we’re about to see a merger. Given Strike generates money, there’s reason to consider whether or not Carnarvon is about to buy a stake in Strike Energy.
For the former’s shareholders, that could be a plus (assuming no red flags), and cash received by Strike could help it continue its overall gas development aims.
Carnarvon, too, is probably looking for something to generate a bit of momentum operationally, and not just for its share price.
One-year returns are down -30% for the smallcap (~$200M), and its most feasible project remains the Dorado project, which is actually 80% owned by Santos. Carnarvon’s stake is 10%.
Strike Energy, meanwhile – capped at ~$460 million – does look a promising candidate from a value perspective, given the company’s rated a ‘Buy’ according to two brokers. But it, too, has been trying to escape recent reputational issues.
In fact, Strike Energy, under new management, earlier this year more or less blamed the former top dog for shareholder pain in a presentation. That presentation failed to address a failed gas well in February of 2024 that really marked the beginning of the company’s relative troubles.
For trivia, Stuart Nicholls has since moved to Elixir Energy, replacing former chief Neil Young.
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At any rate – this could all be incorrect and so not worth speculating at all. Strike and Carnarvon’s trading halts might be completely unrelated.
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