Here’s why the Strike Energy share price is avoiding the bloodshed today

Strike Energy shares are in positive territory today while the broader ASX market slumps.

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A woman stretches her arms into the sky as she rises above the crowd. representing the Strike Energy share price rising today while the rest of the market crumbles

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Key points

  • Strike Energy shares rise 4.92% to 32 cents
  • The company announced it has completed its fertiliser offtake process and selected Koch Fertilizer as the preferred bidder
  • The offtake agreement is for 1.4 million tonnes per annum of granulated urea production from Strike Energy’s proposed Project Haber development

The Strike Energy Ltd (ASX: STX) share price is one of the better performers on the ASX market today.

This comes after Wall Street recorded its biggest loss since 2020 due to investor fears over rising inflation.

At the time of writing, the energy producer’s shares are pushing 4.92% higher to 32 cents.

By comparison, the All Ordinaries Index (ASX: XAO) is 1.61% lower at 7,307.2 points.

What’s pushing the Strike Energy share price higher?

ASX investors are driving up the Strike Energy share price after the company delivered an update regarding its fertiliser offtake process.

According to its release, Strike Energy advised it has concluded its process and selected Koch Fertilizer as the preferred bidder.

The offtake is for 1.4 million tonnes per annum of granulated urea production from Strike Energy’s proposed Project Haber development.

Both parties have signed a non-binding term sheet and will now enter into negotiations to finalise the offtake agreement.

This will be reflected in the key terms agreed in the term sheet. The terms include a 10 to 15-year supply period. The pricing is set to be “linked to international benchmarks and a condition precedent relating to Project Haber’s final investment decision.”

Strike managing director and CEO, Stuart Nicholls commented:

This award creates the foundations for an exciting and transformational period for the Company, at the conclusion of which Strike will have completed its journey to becoming a fully vertically integrated manufacturer of high energy intensive and low carbon emission products.

Securing Koch Fertilizer as Strike’s sole offtaker would give Project Haber a high degree of creditworthiness and financial security. Having a single long-term offtaker for 100% of the urea production will provide the foundation for the financial architecture required to successfully finance this nationally significant development.

Quick take on Project Haber

Project Haber is a fully-integrated low carbon urea development. The project is located along the West Australian Wheatbelt in the mid-west region.

The company is aiming to develop a low carbon urea product to support the abatement of Australia’s agricultural emissions. This is through its adjacent low-impurity natural gas, best-in-class ammonia technology, domestic fertiliser supply, and incorporated green hydrogen.

Project Haber’s urea will support Australia’s farmers by improving the availability of nitrogen-based fertiliser and removing expensive supply chain costs.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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