Dust settles for Strike

EXPLOSIVES maker Orica has re-negotiated an offtake agreement with Strike Energy as part of loan repayment negotiations, a sign the gas market is shifting but also represents progress for the oiler’s Cooper Basin project.
Dust settles for Strike Dust settles for Strike Dust settles for Strike Dust settles for Strike Dust settles for Strike
Strike made headlines in 2013 and 2014 when it inked long-term supply deals with large consumers such as Orica, packaging company Orora, Brickworks subsidiary Austral Bricks and cement maker Adelaide Brighton, despite the early stage of the Southern Cooper Basin Gas Project.
While Strike implied in 2013 it would start supplying Orica with the first of the agreed 250 petajoules in mid-2016, it never eventuated, sparking a dispute between the two companies.
In August this year Strike struck a 64PJ 10-year gas sales deal with Orica that resulted in the withdrawal of a $7.5 million claim against the junior, which replaced the existing 2014 GSA for the supply of up to 250PJ.
Under the new GSA announced this morning which was the result of prior negotiations, the date for repayment of the $2.5 million loan made by Orica in 2013 from July 15, 2018 to December 30, 2021.
This will accrue interest on the loan from July 15 and give Orica the right to convert the loan into Strike ordinary shares in whole or in part any time after September 1 next year until the maturity date.
Strike managing director Stuart Nicholls said the renegotiation and signing of the new agreement with its foundation customer was a "clear indication" that the junior was delivering against its revised strategy issued on June 1 and progressing towards commercial development of the SCBGP in PEL 96 (Strike 66.67%, Energy World Corporation 33.33%).
"The renegotiation of the offtake agreement is evidence that the external environment is changing dramatically around Strike and that forward gas demand continues to grow with supply tightening," he said.
"The development of the Southern Cooper Basin Gas Project will provide a critical supply of gas into the east coast at a time of significant need."