Strike Energy Ltd has executed a gas sales option agreement with CSBP Ltd, a Western Australian industrial gas user, pursuant to which Strike has granted CSBP the option to take up to 100 petajoules (PJ) of gas (Strike share) produced from West Erregulla.
Key terms of the Gas Sales option agreement
- CSBP granted an option for the supply of 80 to 100PJ of gas (Strike share), to be delivered at a maximum of 25 TJ/d from commencement of production from West Erregulla.
- CSBP will pay an option fee to Strike of AUS $5 million by 30 May 2019.
- The option is conditional on a successful result at the West Erregulla- 2 well (WE-2) and Strike taking FID on a commercial project.
- Option will lapse 7.5 years after completion of WE-2 if the opportunity to exercise has not been taken.
- If the WE-2 well is unsuccessful Strike will be required to refund 50% of the option fee in cash or shares at Strike’s election.
- The AUS $5 million option fee will be used as operating capital for the delivery of WE-2, designed to delineate the major conventional gas target in the Kingia- High Cliff sandstones. WE-2 is expected to be completed as a future producer due to the high chance of success of the well encountering commercially recoverable hydrocarbons.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/29052019/strike-grants-west-erregulla-offtake-option-to-csbp/