STX 2.44% 20.0¢ strike energy limited

update from Euroz, again in red what i find interesting,...

  1. 1,988 Posts.
    lightbulb Created with Sketch. 2620
    update from Euroz, again in red what i find interesting, enjoysmile.png

    Strike Energy Limited

    Price (A$)

    -

    Target (A$)

    -

    Rating




    0.40

    0.62

    Buy




    STX: 5 Compelling Reasons to Buy Our Highest Conviction O&G Pick

    Proactive

    Our current highest conviction oil & gas pick is the Perth Basin pure-play STX due to:

    1. Record high WA domestic gas pricing
      1. All-time high WA maximum spot gas pricing last month at $11.59/GJ following a decade of under-investment in exploration and new gas developments causing a current tightly balanced market with a forecast significant future supply gap (>200TJ/d post-2030, over 16% of demand, Source: AEMO).
      2. Gas extremely important for WA's firming capacity of renewables for electricity generation (gas avg. ~40-45% of WA's power, some days 75%+, Source: AEMO).
    2. Maiden producing asset now bringing in important cash flows
      1. Walyering is an impressive, simple and low-Opex asset providing strong margins (we model $0.70/GJ at 25TJ/d). Ramp-up has been rapid over the past month with production steady at the contracted gas rate of 20TJ/d.
      2. Potential to ramp-up to the plant's nameplate capacity of 33TJ/d over the current quarter, providing potential spot-market exposure (and associated higher pricing).
    3. Material organic and inorganic growth, funded with ~$175m cash & undrawn debt
      1. STX is targeting to acquire TPD through a Scheme of Implementation that aims to consolidate 100% of the Walyering cash flows (~$60-80m gross FCF p.a., at 25-33TJ/d) and increase the Perth Basin exploration footprint (L7/EP437 and Condor).
      2. Continue on its Gas Acceleration Strategy of up to 3 other sources of gas production by end-2025. We model production of up to ~52PJ p.a. and FCF of up to ~$264 million p.a. at full run-rate (assuming successful TPD acquisition).
    4. Recently de-risked asset base
      1. Following successful appraisal at 100%-owned South Erregulla and likely ~178PJ resource to reserve conversion, we foresee STX achieving a predominantly reserves-weighted portfolio when reserves are independently certified, target Dec'23 (549 PJe 2P Reserves and 432 PJe 2C Contingent Resources - 981PJe total).
    5. M&A look-through value significantly higher than current share price
      1. STX's JV partner in West Erregulla (Warrego Energy) was acquired earlier this year by Hancock for ~$440 million (~$2/GJ) for a Reserves-weighted gas portfolio in the Perth Basin (net 211 PJ 2P Reserves, 15 PJ 2C Contingent Resources). At that metric, Strike's gas portfolio is valued at ~$2 billion, equal to ~$0.80/sh.

    Action

    We have a Buy recommendation and Price Target based on a risked Sum-of-Parts Valuation of $0.62/sh, materially higher than the current share price ($0.40/sh).

    Upcoming Short-Term Catalysts

    • SE-3 appraisal results (late-Nov/early-Dec), Reserves Certification (target Dec)
    • EP469 (West Erregulla permit) exploration drilling (1HCY2024)
    • Implementation of Scheme with Talon Energy (target Dec)
    • Potential bids for STX, may be prior to explo drilling in 1HCY24, post-2HCY23 activities
 
watchlist Created with Sketch. Add STX (ASX) to my watchlist
(20min delay)
Last
20.0¢
Change
-0.005(2.44%)
Mkt cap ! $572.1M
Open High Low Value Volume
20.5¢ 20.5¢ 19.5¢ $974.2K 4.841M

Buyers (Bids)

No. Vol. Price($)
4 481681 20.0¢
 

Sellers (Offers)

Price($) Vol. No.
20.5¢ 811574 13
View Market Depth
Last trade - 16.10pm 17/06/2024 (20 minute delay) ?
Last
20.0¢
  Change
-0.005 ( 1.04 %)
Open High Low Volume
20.3¢ 20.5¢ 19.8¢ 2500820
Last updated 15.59pm 17/06/2024 ?
STX (ASX) Chart
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.