STX share price blues, page-104

hi jeffro from Macquarie yesterday

Strike Energy (STX AU)
Walyering gas revenues now within reach
Key points
 STX took a $14.4m final investment decision on Walyering gas development
in the Perth Basin ($8m net to Strike), with first gas in 1Q 2023.
 Walyering payback will be rapid given solid WA gas prices (we now assume
A$6/GJ), and the project is helping Strike to optimise balance sheet.
 Outperform. Walyering has a rapid payback period and also helps Strike to
optimise balance sheet – this should drive a re-rating as it materialises.
Event
• STX has taken FID on the Walyering gas development in EP447 (Strike
operates with 55%, partner Talon Energy has 45%).
Impact
• Capex light & rapid payback: With the two production wells (Wal-5 & Wal-6)
already drilled, STX has indicated remaining capex will total $14m (gross), with
completion in late 2022. This includes a processing facility, condensate
storage and tie-back to APA’s Parmelia gas pipeline (PGP).
• Attractive economics: Assuming a 33TJ/d gas plateau, with 5bbls/mcf
condensate yield, we expect Walyering can generate net cash flow of $62m in
FY24. STX confirmed it will operate the site remotely which, coupled with
minimal processing requirements for the on-spec gas, supports attractive
opex; we now estimate $3m/p.a. fixed costs and a variable cost of $0.5/GJ.

Price catalyst
• 12-month price target: A$0.53 based on a Sum of Parts methodology.
• Catalyst: Project Haber sell down