Strike Energy's (ASX:STX) downstream processing agreement with West Erregulla gas field joint venture partner, Hancock Energy, is a significant milestone for Strike, given longstanding uncertainty on a line of sight to revenue for West Erregulla, according to a Monday note by Euroz Hartleys.
Strike reached an agreement with Hancock Energy for downstream processing of Strike equity gas through Hancock's proposed 210 terrajoules-per-day Belisama gas plant in the Perth Basin, onshore Western Australia.
Strike holds a 50% interest in the field, but has long held a valuation lower than that as the market has apparently discounted the progression of the gas to market. With the AU$46 million cash as of June 30, the firm has the funding runway to progress the gas field pre-final investment decision development activities.
The investment firm retained its buy rating on Strike and a AU$0.22 per share price target. The price target was placed under review.