Strike Energy Limited

All right, we'll just give it a couple more seconds as people are funneling in. But good morning, everyone, and thank you for joining us this morning for Strike's Q1 FY26 quarterly report and webinar. My name's Emma Alexander. I'm the Investor Relations Manager at Strike, and I'm joined this morning by Peter Stokes, our Managing Director and Chief Executive Officer. Our Chief Financial Officer, Tim, is unfortunately a late apology this morning. But for those who haven't joined us before, I'll kick over to Peter shortly to run through the presentation and give us an update on the quarterly report and post that we'll be running a short Q&A session. You should have a Q&A button in the window and feel free to type in your questions there and I'll host a short Q&A. I will try and put some of those questions together if you feel you haven't had your question answered. you can always reach out to us on email or on the Investor Hub and we'll do our best to get back to you where we can. With that, I'll pass over to you. Thanks, Peter.

Thank you, Emma, and my welcome as well. Thank you for joining us for the quarterly update. Really pleased to show you the cover slide we've got here showing the progress at South Arigala Power Plant. So you'll see in the foreground the shed containing the 20 engines is now well and truly built. And I'll run through the bit more detail in a minute, but the majority of the engines are now in the shed and being installed. And you'll see in the background the flow testing that we recently did at South Arigala 1 as well, which has demonstrated and reaffirmed the flow rates that we'd expected and the composition of gas, et cetera. So really pleasing to have that done as well. In the foreground of the picture here, you'll see also the civil's work that's now been completed for the transformers, which will then run into the power line to connect us to Western Power. If you go to the next slide, please, Emma. Highlights for Q1, 2026. So as I said on the previous photo, you can see in the background here, the yenbacker units that have now been installed in our facility at South Arigala. 17 of the units are on site, 15 have been installed, and the final three will arrive over the next couple of weeks and head up to site as well. A lot of the core infrastructure is in place. You may have noticed on the previous photo that the kiosks that manage the power coming out of the units were installed on the outside of that facility as well. Really pleasing to have the majority of this core infrastructure now in place, and we're now building out the electrical connection and those core components of substations, et cetera, that will connect us into the local Western power line there. The project is now just over 50%, so actually 56% completed and still on track to deliver first power by 1 October 2026, and we're doing everything we can to bring that date forward, but we're sticking with the date that we previously announced. Importantly, during the last couple of weeks, we had our capacity credits confirmed for the 27-28 capacity year at $31 million, which is a significant increase from our first year where we were at $20 million, and that continues to point to tightening demand around both gas and power in the market in Western Australia. And we will then see electricity sales on top of that base amount. I think, importantly, during the quarter two, the $86 million strategic placement was completed with Carnarvon. Really excited to be partnering with Carnarvon and working with them. And we also raised a further $1.7 million via the share purchase plan, which was also really positive. We're continuing to engage with Carnarvon and you would have noticed also that Will Barker has joined our board from Carnarvon to represent that interest as well. During the quarter, we also announced Ocean Hill resources have been certified from the 3D seismic that was completed. It took quite a while to get the seismic lines approved or area to cover the seismic and we were able to process that data and out of that data, which has been independently verified, we have 180 pj2c contingent resource and in addition at Ocean Hill there's another 190 pjs of um two um p perspective resource um two yeah sorry perspective resource and then um at ocean hill the additional area we announced while we knew that there was a a resource in the southern area of those leases the 3d seismic has identified a 670 pj perspective resource in the south ocean hill south area I mentioned at the start of the presentation also that the South Arigala 1 workover is complete and we will start work on the upstream works that need to be done shortly in that area, including the pipeline to connect us to the power plant, which is pretty much adjacent, as you would have seen from the photo on the front cover. Financials for the quarter. We continue to have strong sales, so $18.8 million of sales revenue. We had an average realised gas price of $7.38, about level where we were previously, a total of 2.1 PJs of sales. during the month at 23 TJs a day, so really solid production from the way you're in facility. We also realised a strong price for our condensate. Expenditure during the quarter, we had $31 million on development, the bulk of that being the power plant, with a small amount of spend at we're hearing in preparation for the compression. And then a smaller number again on some of the exploration activities relating to West Arigala. With the injection of the funds from Carnarvon liquidity position is very strong at $140 million of available liquidity. as you can imagine up significantly from the previous quarter. And we also have of that $140 million, $35 million of available undrawn debt with our bank. And no debt was drawn during the quarter as you can imagine. Strike Energy has some really great prospects ahead of us. The reason I joined is we have some outstanding assets and are incredibly well positioned to benefit from the significant changes that we're undergoing globally, both With the transition to renewable power, gas being a key part of that transition to provide firming and then underpinning that is significant growth both globally and in Western Australia and Australia more broadly around AI and the data centres that underpin a lot of that into our future. um ai is a critical part and requires significant um power to generate that large you know large part of that globally is coming from um gas power generation uh and we're well positioned to provide that for western australia as well as it continues to develop Western Australia's exit from coal-fired generations committed to by the government here will remove in excess of one gigawatt of dispatchable power by 2020-30, and that requires significant backfill from renewables, but importantly also, firming gas power generation is a critical part of that as well. There is the AMO report that was released just after mid-year, really confirmed the forecast that we'd expected that there is an emerging capacity deficit during the latter part of this decade and certainly into the early part of the next that requires gas and power storage to enable that to be filled. Strike has a significant acreage in the Perth Basin of some 3,000 square kilometres. ideally placed within the swiss this the southwest structure and the is uniquely placed to supply power into that grid as well as gas because we are also within the power lines that um sit in in western australia within sorry the pipelines um to feed into um gas fired use for industrial both into the southwest of Western Australia and continue to build and support the WA government's built in WA program that they are really supporting and driving to enable Western Australia to continue to grow and prosper into the future. The Perth Basin Gas really provides reliable firming capacity for a lot of AI-driven data centres, opportunities both regionally and in the metropolitan area to support that through power, but also for gas that would be used for power generation as well. The growth of the data centres and AI really requires significant electric power, and that's not really been factored into a lot of the forecasts. And you can see from a couple of the quotes at the bottom, there is a significant requirement of that going into the future, really yet to be quantified. Western Australia is well placed to provide that. capability into Southeast Asia, but also significantly for the state and more broadly into Australia with significant land available, but also supported by renewables and firmed by gas-fired power generation. Focusing on our four strategic pillars and the key projects that we defined out of the strategic review that we released early in the quarter, West Arigala continues to progress. We are working to now finalise the pre-FID activities with our joint venture partner. We're coming very close to having agreement on those. The recent field gas discovery at Arigala Deep and the 3D seismic acquired from the NATA survey are now being independently certified after the work that we've done internally and our joint venture partners done, and we can continue to commit to having that released by the end of December 2025. We're exploring multiple attractive midstream development opportunities from gas processing to power generation. And once we've got clarity on those and the confirmed path forward, we'll be able to announce that to the market as well. I talked about South Arigala. We are the 100% operator. The 85 megawatt peaking plant is progressing well. The first of the power lines will commence being built in early November. With the connection to Western Power, Civil Works has already started and that will start to be built out over the next several months so that we're ready to connect into the Western Power grid and complete testing to enable us to then have first um power generation connected into the grid as as planned um fully running at full capacity from one october next year um while hearing remains online and continues to produce well we are reproducing at a rate of 20 tjs a day and filling that with five tjs a day of third-party gas until the end of the atlanta contract at the end of the year We've been purchasing that five TJs a day of gas on the market while prices are soft to mitigate any shortfall that we have. And we have that option going forward. We're working through what that looks like into next year while we finish the installation of compression, which we expect to have in very early into the new year. As we've also announced, we plan to do the way west well in February, so to drill that, which is some three kilometres away from the facility that you can see here in the picture. And we would be looking to do that and potentially on success would have that online sometime into the third quarter of next year, subject to various approvals and things. On exploration, I've talked about Ocean Hill. We will still continue to look at opportunities to put a well into Ocean Hill, as we talked about in one of our previous announcements, ideally into the first half of next year. But as we committed, we want to have that drilled in the calendar year 2026 and also looking to try and bring that forward subject to final agreements, approvals, et cetera, and also lining up the appropriate funding to do that. The 3D seismic, as I said, has identified some really significant improvements and significant prospectivity there that we now need to test with a well and confirm around Ocean Hill and then test into Ocean Hill South. On the next slide, talking about the South Arigala, you can see from the photos here a significant progress on the power plant. This is a view from the other side. These are the radiators for the 20 generation units, the mufflers and things are in, the generators are in, the plant, the facility is now getting connected you can see on the left hand side one of the kiosks and with some of our team and the connections of those are now underway and being connected into the generators on the left hand right hand side of that picture and then the underground power is already there ready for the transformers when they arrive at site over the next couple of months and then we'll be connected By then, the power line will be running down to our substation, which is right near the Western Power line. So the engine hall's complete, as I said earlier. The ends of the shed, you'll notice on the front cover are open. That was to give us access. They'll get closed up once all of the generators are installed and also once the fans on the left-hand side of the shed go in. As I said earlier too, the earthworks for the transmission and connection have now started and will continue to be developed over the next several months and remain on track from the work that we've done. Thank you, Emma. I'll now hand back to you to work through some of the questions.

Thanks, Peter. Sorry, having slight technical difficulties. Apologies for a few of those slides being a bit slow. We've got a few questions that have come through from the pre-webinar questions, but I'd also like to point out that people can place questions in the chat box if they would like to ask anything. We have one from Darryl Watts. In regards to the Arigala Deep Reserve, the previous CEO had made a statement record at last year's AGM that the Aragulla Deep result would be released by June 2025 and we are now at the end of October. Can we have an update on the current status of this and why it's being held back from shareholders?

Yeah, sure. So thank you for the question. As I said in the presentation, we'll have those released in December. The 3D seismic from the provider was not, we didn't start receiving that information until almost mid-year and then both ourselves and our joint venture partner need to do our view, our reviews of those before they then go to the independent verification, which is now underway. So we I think as we'd said in the half, we were intending to do everything we can to bring it forward. But our backstop was to have it by the end of 2025. And that's still the case.

Great. And a follow up. if you can shed some light on the current situation with the West Arigala power optionality that you were talking about earlier this year.

Yeah. So we are looking at several midstream development opportunities for West Arigala. Power generation is still an opportunity for us. Processing gas is also an opportunity for us. And as once we have a clear path forward, we can announce at the moment we're still in various commercial discussions and not in a position to announce anything. And we want to make sure that when we do make an announcement, we're very clear on the path forward and are able to demonstrate that clearly to our shareholders so that there's no question about which way we're going as opposed to painting potential options. I think we want to be very clear so that everyone understands and can, I guess, model that for themselves. Great.

There's a question coming through on whether you can provide an update on the Westarragulla joint venture and another question that's come through specifically asking whether there's any comment on involvement with Hancock's recently announced Bellisama project.

It's very similar to the last one, Emma. We're certainly having discussions and that path with our joint venture partner would be one option to develop, but at the moment it's just we're not in a position to announce any more. We'd like to be able to, we want to be really clear that we've got a path forward with the joint venture partner or others so that we can make an announcement and ensure that we're not changing direction after we've made a commitment.

Great. Is there any, so how much, Are you able to provide any colour on how much was spent on the third party gas purchases to appease contractual obligations in the quarter?

Thanks, Emma. I think you can probably, from our numbers, you can probably make an estimate. We're not, I mean, the amount that we've spent is a commercial, you know, commercial in confidence with our providers and with our gas offtake agreement. So unfortunately, I can't give you any more information, but I think you can probably estimate that based on the production that we've got there and the revenue that we've got in the facility can give you a good indication of what it would be.

Is it possible at all to provide some guidance on growth of power and gas sales at all into the future?

Yeah, I think, so I mentioned, so if we look at where we're hearing and assume it'll continue to produce at around 20 terajoules a day next year. So we expect while, you know, while during this last quarter, we're produced at 23 TJs to deliver $18 million or $19 million of revenue into next year, if we assume 20 terajoules a day of revenue from way hearing. And then the power plant coming online from October one next year. There's a as I said earlier, there's a $20 million capacity credit that underpins that power plant and then 30 million the following year from one October 2026. And then on top of that, we will receive the power that we a payment for the power that we generate. Roughly where we have used estimate, I think similar to FID, around $60 million of revenue from the power plant on an annualised basis from October next year.

Great. I think we don't have any other questions coming through as such. And if that's the case, we might wrap things up. Just a note on our AGM, it will be on the 13th of November, held in the Parmelia Hilton and online as well. Otherwise, we will see you again for the next quarterly webinar in January.

Thank you for joining us and thank you for your questions. And I look forward to seeing as many of you who can attend the AGM in person in a few weeks. Thank you.