51c valuation from Bell Potter

latest from Bell Potter

Transposing value: STX has the largest Perth basin position
The corporate activity has revealed multiple independent views on the value of Perth
Basin gas from groups with large energy consuming projects as part of their strategic
pipelines. The activity is further supported by recent AEMO reports pointing to gas
supply shortfalls in the Perth Basin. Intriguingly, WGO’s only material asset is its 50%
non-operating interest in West Erregulla; 2P Reserve 221PJ. Strike Energy is joint
venture partner and operator of West Erregulla and has the largest 2P Resource plus
2C Contingent Reserve position in the Perth Basin at 1,025PJ. In this report we
discuss the translation of the WGO values across STX’s positions.

Investment view: Speculative Buy, Valuation $0.51/sh
The bid for WGO provides a path to unlocking value through consolidating ownership
of West Erregulla (STX 50% and operator, WGO 50%) and integrating this asset into
STX’s broader Perth Basin energy portfolio. We also expect STX to re-rate as the
company transitions from developer to producer in Q1 2023 and first gas from
Walyering (STX 55% & operator) is sold into a 36.5PJ offtake agreement with Santos
Ltd (STO, not rated). Corporate interest in WGO may be a pre-cursor to broader Perth
Basin energy consolidation; STX currently has the largest gas Reserves and
Contingent Resources position in this region.