Strike Energy Limited

I'm Emma Alexander, Investor Relations Manager at Strike Energy, and welcome to the quarterly webinar for Q3 FY25. Shortly, I'll hand over to our Executive Director and Acting CEO, Jill Hoffman, who will run through the short presentation released this morning before we will host a Q&A session. This session is going to be run slightly differently than past webinars. We have our covering analysts joining us online today, so we'll be hosting a live Q&A session with the analysts. A recording of the webinar will also be available on our website after the session. If any shareholders have any questions that you feel haven't been covered by the Q&A with the analysts, we do encourage you to use the Investor Hub functionality to post those questions online. Do appreciate that this has been a little underutilised recently. However, with today's format, we are going to encourage the use of the hub and we intend to answer as many of those questions as we can and we'll post the questions and responses publicly if it's appropriate to do so. With that, I'll hand over to Jill to kick things off with the presentation.

Thank you, Emma, and good morning, everyone, and thank you for joining us here today. I'm Jill Hoffman and I appreciate the opportunity to speak with you all and share with you the activities of strike over the last quarter. This quarter was marked by continued safe and reliable operations at Wallyering, and we also made steady progress against our project portfolio. Wallyering continues to deliver safe and reliable operations, and at South Yarra Gulla, we broke ground, and you can see that we've now got visible progress of construction at site. We also completed the nano3D seismic survey over Irrigulla Deep and the northern part of West Irrigulla. And this will provide us with some subsurface definition and will also inform information for our independent reserve certification. We also executed the definitive documentation of the Macquarie financing, and this provides strong financial footing as we progress the construction of South Irrigulla. Collectively, this positions as well as we lead into the end of the financial year. Now, in relation to the CEO, so in late January, we selected an executive search firm. Can you just change the slide, Emma? And from that progress process, sorry, we've received some really high caliber candidates. Progress has been very strong. to the point where we expect to make an announcement to the market by mid-May. And thereafter, we expect the CEO to start reasonably soon thereafter. On the strategic review, we also started that work in January and we recruited Oliver Wyman to support us. Our intent is to share the outcomes of the strategic review with the new CEO, because it's incredibly important that they're comfortable with those findings. and that they can support them in the delivery. Thereafter, the next steps is we will share that with the market more broadly. This quarter, we also completed the acquisition of the 3D seismic data over Uragalla Deep and the northern part of West Uragalla. This data will complement our existing understanding and support the assessment of the commercial development options for West Uragalla. West Yarra Gulla has formed a key part of the strategic review and we've assessed multiple development options on how we can best monetise those reserves. And pleasingly, both Strike and Hancock are working to develop West Yarra Gulla to meet expected market demand. It's then prudent to talk about the role of gas in the WA energy market and its increasing importance. On the demand side, we see that gas is essential for power and industry, whether it's domestic use, mining or industrial feedstock. We also see gas is very reliable and flexible, providing renewable penetration or supporting the renewable penetration and grid stability. And there's also very clearly rising demand for gas in WA, whether that's driven by mining, industrial expansion and also electrification. What's also pleasing to see is both the state and the federal government see gas as a cornerstone of the energy transition. On the supply side though, what we're actually seeing is declining gas reserves. There's been a lack of investment, which has led to an 81% reduction in oil and gas drilling since 2007. Not surprisingly then, we're seeing AMO forecast and energy shortfall in 2000 starts appearing in 2027. and then exacerbates in 2030 when the state government intends to switch off the coal-fired power generation. At that time, we see about a 6% increase in supply gas demand. From a strike perspective, we're very much committed to supporting the state government through this process or the energy transition, and that support will come in the form of gas to power developments and also the development of our assets in a very timely manner. Moving on to South Yarra Gallera and what we can see in the slide here is the visible progress that happened at site. And for context for you, the engine room size or the shed that's going to go over the engines is about 150 by 22 metres. We're taking a really disciplined approach because what we want to do is manage the execution risk under the construction phase. And in doing that, we've completed the internal handover from the strike development team to the strike construction team. We've awarded and executed the majority of our major equipment packages, such that 50% of the capex is locked in through fixed price contracts already. We've also undertaken an independent review to confirm our execution readiness, and that came out with a couple of very minor findings. And then the last thing that we've done in the last quarter is we've incorporated or made sure we've incorporated the wall year in construction lessons learned into the process for South Urugala. We are on track to deliver the power station to be online for the 1st of October, 2026. And in that first year of production, we anticipate $18 million in revenue from the capacity credits. And then that revenue will be supplemented when we turn the gas engines on and generate electrons. Now, this slide underscores why Strike has chosen an integrated gas power concept for South Yarra Gullah. It's a vertically integrated model and Strike controls the complete value chain. It's a little unusual to see someone control that whole value chain, but it's certainly beneficial. The power plant itself is going to be located on the precinct, which, as you know, is strike-owned land, and it's also going to be located on top of the gas reserves at South Urugela. Because of this, we've negated the need to build gas pipelines, and we also don't have to build a gas processing plant, which is what you'd typically see in a traditional model. And the reason we don't have to build a gas processing plant is there's only a small amount of work that needs to be done to align the gas spec to feed into this feedstock gas into the power plant. So this avoidance of major capital has made the economics much more attractive and it's actually saved us tens of millions of dollars. The other thing that this model does, it gives us a lot of operational flexibility. So we've got no take or pay contracts for pipelines in terms of gas storage, We've got no take or pay obligations under a gas sales contract. And what that does, it gives us a lot more flexibility on how we operate the plant because we don't have to manage the operation within the constraints of those take or pay contracts. So collectively, these attributes mean that this power plant is the lowest cost gas producer of electricity in the Swiss, the Southwest Interconnected System. We've removed, and that's because we've removed significant OPEX and CAPEX in this model. It's also enabled us a shorter time to start up. So not having to build the gas processing plant or the pipelines is condensed that period. We also have a lower carbon intensity relative to a traditional gas processing, or sorry, relative to a traditional gas generation. And we also deliver the greatest value per molecule of gas. And at $140 a megawatt hour, megawatt, sorry, the look-through gas price is $28 a gigajoule. And that does include the capacity presence. Now, touching on the financials for the quarter, while Yearing remains a reliable gas generator, production's been steady at 25 TJs a day, which has meant that we've been able to fulfil all of our gas needs. nominations. Sales revenue was up around 6% and the reason for that is we had an advantageous foreign exchange and in this quarter, we didn't have the annual planned maintenance shutdown. Subsequent to the quarter, we've met our conditions precedence for the first try to the Macquarie facility, which enables us to progress the South Yarra Gallop. Looking ahead, we remain very focused on finalising the CEO recruitment process and the strategic review outcomes, and that does include the capital allocation framework to provide guidance on the development pathways for all our assets. We're going to continue to be very focused on the South Yarra Galla gas peaking plant, and some of the key activities that we'll be undertaking this quarter is the concrete works for the gas engines, The factory acceptance testing, again, for the gas engines. Those engines are currently located in Austria, so they have their fat testing prior to shipping to Fremantle. We'll also award the transmission line and switch out erection works. We will interpret the NATO 3D seismic and the next steps for West Uruguay, and we will also maintain our operational reliability at World Water Year End. And in summary, we're entering a period of important execution with near-term milestones that set us up for long-term value creation. And on that note, I'm going to hand over to Emma to host the Q&A. Thanks, Emma.

Great. Thank you. Apologies, everyone, if the slides stopped there. My computer had a little bit of a freeze up. Took a while to catch up. Now we've got Dale Kernders who, if you'd like to unmute Dale and ask a question.