STX 42.2% 9.1¢ strike energy limited

The Value of success at Jaws and WE2

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    I wanted to determine what the value of Strike may be if success is achieved at both WE2 and Jaws.

    I found a good article on the companies website by Strachan Corporate from January 2018 pre JAWS and Eurrallia. Its a pity the research hasn't been updated, as I regard Strachan's research as very good. That being said, I built the following model based on some assumptions in the Strachan research plus my own investigations.

    I have also based a value on WE2 on the sale value of Waitsia.

    It was pleasing to see the PRRT has been deleted from onshore exploration from the 1/4/19, which is a great benefit to Strike. Assuming my interpretation of the ATO releases is correct. This decision by the ATO has greatly increased the NPV of the JAWS and Erregulla projects.

    The one issue I am still grappling with, is the number of wells that can be drilled per annum. However, I think I have been conservative on this aspect of the model.

    Given that Halliburton will earn $9 m per well, I am sure that an arrangement to fund the drilling can be tied into the contract based on revenue flows. Reading between the lines of previous announcements gives Halliburton a right of refusal on drilling the project.

    I am happy to amend the model based on any comments from those with much more knowledge than myself.


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