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Orica and Strike Energy Sign Cooper Basin Gas Supply Deal

Source: www.gulfoilandgas.com 7/16/2013, Location: Not categorized

Orica Australia and Strike Energy have entered into a binding term sheet for the supply of up to 150 PJ of gas to be produced by Strike from PEL 96 (Strike 66.67% and operator; Energy World Corp 33.33%). The agreement is an innovative risk-sharing arrangement designed to facilitate the evaluation and commercialisation of a large prospective gas resource (2.7 – 6.3Tcf gas net to Strike) defined within PEL 96 which forms part of Strike’s larger Southern Cooper Basin Gas Project (PELs 94,95 & 96) in South Australia.

To secure its gas offtake Orica can elect to make up to $52.5 million of gas pre-payments as Strike achieves appraisal and development milestones. As part of Orica’s project due diligence, leading petroleum industry consultants, DeGolyer and MacNaughton, were engaged to advise on both technical and commercial considerations. Development of the PEL 96 prospective gas resource provides an opportunity for Strike to become a new independent Cooper Basin gas supplier.

Orica Managing Director and CEO Ian Smith said: 'This agreement has the potential to provide a future new source of gas supply to our Australian east coast manufacturing plants at an affordable price.'

Strike’s Managing Director, David Wrench noted, 'This is a break-out transaction for Strike, providing the opportunity to unlock substantial value in our Southern Cooper Basin Gas Project. Today’s announcement is a win-win for both parties, providing potential gas supply at an acceptable price for Orica while delivering to Strike a material contribution towards the appraisal and development of the project.'

Strike, as project operator, will commence field activities in the current quarter.

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