Strike Energy has not ruled out asset divestment as part of a strategic review of its operations, while its new management prepares to meet joint venture partner Hancock Prospecting today.
Strike Energy has not ruled out asset divestment as part of a strategic review of its operations, while its new management prepares to meet joint venture partner Hancock Prospecting today.
The John Poynton-chaired gas producer recently announced the departure of long-serving chief executive Stuart Nicholls along with the review, which prompted speculation from some analysts of a potential Hancock takeover.
Hancock bought Mineral Resources’ Perth Basin gas assets for $1.1 billion late last year and has been Strike’s joint venture partner at the West Erregulla gas project since 2023 – when it outbid the gas producer in a battle for former JV partner Warrego Energy.
On an investor call this morning, Strike’s acting chief executive officer Jill Hoffmann revealed she was meeting Hancock today.
She made no link between the meeting and divestment and said no offers were on the table for Strike’s assets, but said the company would look at selling projects if it made sense to.
“The strategic review will consider all options, including seeing all of our assets through to commercialisation versus potentially divesting some assets,” Ms Hoffmann said.
Ms Hoffmann said sales were “not a foregone conclusion”.
Today’s meeting with Hancock comes after the West Erregulla operator delayed a final investment decision at West Erregulla late last year.
The delay followed the MinRes asset acquisition, with the Gina Rinehart-chaired company prioritising work there in the immediate term.
Ms Hoffmann said Strike respected its joint venture arrangements with Hancock, and that she was looking to engage with the company constructively and openly.
“At the end of the day, we’ve got to work together regardless of who the joint venture participant is,” she said.
“I’ve found through my recent past that creating constructive relationships is the best path.
“In any JV, sometimes you agree and sometimes you disagree. So the challenge then becomes working out how you can get an aligned way forward.
“Whether it’s West Erregulla or any other JV, that’s the approach I’m going to be taking.”
The West Erregulla delay was a blow to Strike’s plan to develop four gas projects by the middle of the decade under a gas acceleration strategy announced in 2023.
That plan appears to be on pause while the review is undertaken, as part of a board directive to realise full shareholder value for the Strike portfolio.
Strike’s share price took a dramatic hit early last year when poor drill results at the South Erregulla project prompted a significant sell-off.
The company’s shares entered 2024 trading at 50c each but fell to around 20c per share on the news and have hovered below 30c ever since.
They are currently trading at 24c, valuing the company at $688 million.
Strike plans to develop a peaking power plant at South Erregulla, complementing its producing Walyering gas asset which supplies the domestic market.
Strike announced yesterday it had received credit approval to the tune of $162 million from Macquarie to progress the project.
The company generated $17.5 million from gas sales during the December quarter.
Strike shares were flat at 24c at 10.30am.
