Strike Energy Targets Three Revenue Streams by 2029 as Power Plant Nears Launch
Key Takeaways
- South Erregulla's 85MW power project is forecast to reach practical completion on 31 October 2026, with capacity payments ramping from ~$19m in CY27 to up to ~$42m by CY29.
- West Erregulla's 251 PJ net 2P Reserves — up 20% after Natta 3D seismic interpretation — now have a defined development pathway via an Implementation Agreement with Hancock Energy, targeting first gas in 1H CY29.
- At an illustrative $8/GJ gas price, West Erregulla alone would generate approximately $127m per annum in revenue for Strike's 43.5 TJ/day share of the development.
- Walyering's 2P reserves grew 21% to 16.4 PJ despite producing 5.7 PJ during FY26, with production now running at 20 TJ/day heading into FY27.
- Strike's entire Perth Basin reserves and resources base (2P + 2C) is valued at just $0.68/GJ at the current $414m market capitalisation, against three revenue streams converging toward 2029.
Strike Energy maps a multi-revenue future as South Erregulla nears first power
In its FY26 full year results presentation delivered on 29 September 2026, Strike Energy (ASX: STX) outlined a company in active transition, moving from a single producing asset toward a diversified energy group with three distinct revenue streams. Gas production at Walyering is already generating cash, the 85MW South Erregulla Power Project is approaching commercial operations, and the West Erregulla gas development now has a defined pathway to a final investment decision.
The investment thesis the presentation framed is built on scale and sequence: three revenue streams converging toward 2029, underpinned by a Perth Basin reserves and resources base valued at $0.68 per GJ (2P + 2C) at current market capitalisation.
Key portfolio metrics at a glance:
- Market cap: $414m (based on $0.110 closing price, 28 September 2026)
- Shares on issue: 3.6 billion
- FY26 sales revenue: $62.8m
- Underlying EBITDA: $17.6m
- Cash at 30 June 2026: $46.3m
- Net assets: $355.6m
When big ASX news breaks, our subscribers know first
FY26 financial results — a year of heavy investment, not harvest
The presentation framed FY26 explicitly as a deliberate investment year rather than a period of earnings delivery. Revenue declined from $72.7m in FY25 to $62.8m, driven by lower Walyering own-gas production due to natural field decline and compression constraints. Strike supplemented output by purchasing and on-selling 2.37 PJ of third-party gas to maintain firm contract commitments, but this partially offset rather than fully replaced the production shortfall.
Underlying EBITDA fell to $17.6m from $41.6m in the prior year, reflecting both the lower revenue base and the cost structure of an expanding business. Capex of $151.3m reflects the South Erregulla Power Project build and Walyering infrastructure investment — the primary reason earnings contracted.
The net loss of $27.2m represents a significant improvement from the $157.3m loss recorded in FY25, though that comparison requires context: the FY25 result included a $117.7m impairment charge that heavily distorted the period-on-period comparison.
| Line Item | FY26 ($’000) | FY25 ($’000) |
|---|---|---|
| Revenue from gas and oil sales | 62,777 | 72,717 |
| Cost of sales (excl. D&A) | (29,954) | (17,707) |
| Other income | 1,376 | 4,301 |
| Other operating (excl. D&A) | (16,613) | (17,700) |
| Underlying EBITDA | 17,586 | 41,611 |
| Depreciation and amortisation | (30,548) | (51,974) |
| Impairment expense | (2,715) | (117,748) |
| Loss for the period | (27,187) | (157,328) |
Walyering — restoring production and rebuilding reserves
The Walyering story across three years is one of decline, intervention, and recovery. FY25 saw field production soften due to reservoir decline and compression requirements. FY26 was the investment phase: a second heat exchanger was installed, two compression packages were commissioned, and the Walyering West-1 well was drilled and tested. The result was a 21% reserves increase.
Heading into FY27, production is running at 20 TJ/day with compression now supporting that rate, and the Walyering West-1 tie-in progressing through Front End Engineering and Design (FEED). FEED is the detailed engineering phase that precedes a construction decision.
The 2P reserves reconciliation illustrates how reserves grew despite production:
- FY25 2P reserves: 13.6 PJ
- Less FY26 production: 5.7 PJ
- Plus reserves review: 8.5 PJ
- FY26 2P reserves: 16.4 PJ
Walyering also holds 17 PJ in 2C Contingent Resources, and the presentation noted approximate revenue of ~$52m per annum at current firm offtake arrangements.
South Erregulla — a new earnings engine approaching switch-on
The 85MW South Erregulla Power Project is the article’s most time-sensitive element. The presentation highlighted that practical completion is forecast for 31 October 2026, with first power targeted in Q4 CY26. Strike owns and operates the asset at 100%, and it carries 45 PJ in 2P Reserves and 37 PJ in 2C Resources.
The project generates revenue from two sources: capacity payments (contracted, predictable) and electricity sales (variable, dispatch-dependent).
Capacity revenue is expected to ramp progressively:
- CY27: ~$19m
- CY28: ~$31m
- CY29: up to ~$42m (based on a Benchmark Reserve Capacity Price of $488,500/MW per annum, with the final Reserve Capacity Price expected to be announced in November 2026)
Electricity sales revenue depends on how many hours per day the plant is dispatched and at what price. The presentation provided the following illustrative scenarios, which are not forecasts and should not be treated as such. Actual revenue will vary with dispatch levels, realised electricity prices, plant availability, and operating conditions:
- 6 hrs/day utilisation at ~$125/MWh: approximately ~$23m per annum
- 10 hrs/day utilisation at ~$110/MWh: approximately ~$34m per annum
The total forecast project cost is approximately $186m, with the capex program substantially reflected in FY26’s $151.3m spend.
Understanding the Perth Basin opportunity — why WA gas matters
Western Australia operates an isolated gas market, completely separate from the east coast grid. That isolation makes local supply security a structural issue, not a cyclical one. AEMO’s 2025 WA Gas Statement of Opportunities forecasts a growing supply shortfall in the state, which creates a demand backdrop that benefits Perth Basin producers.
For investors new to the terminology: 2P Reserves refers to the “proved and probable” category of gas resources — those with at least a 50% probability of being economically recoverable. 2C Contingent Resources are those that are estimated to be recoverable but have not yet been committed to development. Both figures are independently audited under industry standards.
West Erregulla — the growth engine with a defined path to FID
West Erregulla is Strike’s transformational asset. The presentation detailed that a development pathway was established post-year-end via an Implementation Agreement with Hancock Energy. This agreement includes a binding fixed processing Capacity Charge and access to Hancock’s technical and development capability via the proposed Belisama Gas Plant.
Strike’s net 2P Reserves at West Erregulla stand at 251 PJ, up 20% following Natta 3D seismic interpretation and an independently audited reserves review. The target production rate for Strike is 43.5 TJ/day, representing a 50% share of the proposed 87 TJ/day West Erregulla development, though this target is subject to completion of development activities, finalisation of joint venture and gas processing arrangements with Hancock Energy, a final investment decision, and other customary development conditions.
The timeline management presented targets upstream FID in mid-FY28 and first gas in 1H CY29. At an illustrative gas price of $8/GJ, indicative annual revenue would be approximately $127m. The presentation also outlined the following revenue sensitivity across illustrative gas prices:
- $7/GJ: ~$111m per annum
- $8/GJ: ~$127m per annum
- $9/GJ: ~$143m per annum
- $10/GJ: ~$159m per annum
On funding, Macquarie’s Tranche B2 facility was increased to $30m and drawn on 7 September 2026. A Hancock Energy pre-FID loan of up to $30m has also been agreed in-principle, though this remains subject to finalising documentation and Macquarie consent.
FY27 financial priorities — four clear directives from management
The presentation outlined four priorities for FY27, signalling a deliberate shift from investment phase to cash generation:
- Convert South Erregulla into cash flow (practical completion forecast 31 October 2026)
- Service debt from operating cash flow (asset finance amortises from October 2026; Macquarie debt from December 2026)
- Fund West Erregulla to FID via the Hancock Energy loan (up to $30m, subject to long-form agreements and Macquarie consent)
- Capital discipline across exploration and development programmes
The debt structure supporting this plan is summarised below:
| Facility | Limit ($m) | Drawn 30 Jun 26 ($m) | Repayment |
|---|---|---|---|
| Macquarie – Tranche A1 | 60.0 | 60.0 | From Dec 26; matures Mar 29 |
| Macquarie – Tranche A2 | 13.0 | 13.0 | From Dec 26; matures Mar 29 |
| Macquarie – Tranche B1 | 17.0 | 17.0 | From Dec 26; matures Mar 29 |
| Macquarie – Tranche B2 | 23.0 | – | No amortisation |
| Macquarie – Tranche C | 40.0 | – | Uncommitted; subject to conditions |
| Asset finance – gas engines | 49.0 | 49.0 | 5 years from Oct 26 |
| Asset finance – other | 15.0 | 14.7 | 5 years from Oct 26 |
| Rabobank – farm mortgage | 6.0 | 6.0 | Bullet, Dec 28 |
Total borrowings (book value): $157.7m | Cash: $46.3m | Net debt: $111.4m | All covenants complied with.
The next major ASX story will hit our subscribers first
The investment case — why Strike, why now
The presentation closed with Strike’s own “Why Now?” framing. The core pillars management highlighted were:
- West Erregulla unlocked: A clear development pathway for one of WA’s largest onshore conventional gas resources
- Revenue growth: Walyering, South Erregulla, and West Erregulla combined providing a pathway to a materially larger production and earnings base
- Diversified energy exposure: Natural gas production and dispatchable power providing exposure to two distinct markets
- Funding pathway: Development funding support and aligned partners providing a pathway to progress the portfolio
- Organic growth: Approximately 3,000 km² of Perth Basin acreage providing multiple material opportunities
- Exploration upside: Ocean Hill (180 PJ 2C), Kadathinni, and L26 as future growth optionality
- Land optionality: The 3,500 ha freehold land position adds potential for renewables, data centre co-location, and energy-intensive industry
The reserves and resources base valued at $0.68/GJ at current market cap, combined with three revenue streams targeted for convergence by 2029, represents the investment thesis Strike’s management presented to the market.
Get ASX Energy News Before the Market Moves
Big News Blast delivers FREE breaking ASX energy and gas sector alerts directly to your inbox within minutes of release, complete with in-depth analysis. Join 30,000+ subscribers already staying ahead of market-moving announcements. Click the “Free Alerts” button at Discovery Alert to ensure the next major ASX energy update lands in your inbox the moment it breaks.