Strike Energy's (ASX:STX) downside appears limited at current levels, while upside exposure remains "significant" through stronger domestic gas pricing, asset progression, exploration success, and potential mergers and acquisitions, Euroz Hartleys said in a note on Wednesday.
Near-term catalysts include the Walyering West flow test results, binding terms on a downstream commercialization at West Erregulla expected via the nearby producing Waitsia gas plant, and first gas sales from the South Erregulla peaking plant targeted for Oct. 1.
At steady state, Strike is forecast to generate around AU$90 million per year in earnings before interest, taxes, depreciation, and amortization (EBITDA) following South Erregulla's start-up, increasing to around AU$150 million per year once West Erregulla is online.
The investment firm retained its buy rating on Strike Energy and a price target of AU$0.22 per share.