Strike Energy Ltd (ASX: STX) recently released its first-half production report and provided an update that construction of its peaking gas power plant in Western Australia was 72% complete.
Strike is a bit different from many oil and gas companies in that it is currently a gas producer but is also looking to use that gas to put through its power plant once it's finished.
The company said last week that it produced 1.59 petajoules of gas at its Walyering operations during the second quarter, generating $16.6 million in gas sales revenue.
The company was also continuing to drill at Walyering, "with any success at Walyering West-1 representing upside to Strike's current supply and cash flow planning.''
Strike Managing Director Peter Stokes said in the company's ASX release that it continued to execute its plans well across the portfolio.
Material progress was made at the South Erregulla 85 MW Peaking Gas Power Project, which is 72% complete at quarter end and remains on track for its targeted 1 October 2026 completion, supported by a strong safety performance during a sustained period of construction activity. With drilling services secured for Walyering West-1 and key regulatory approvals progressing across the portfolio, Strike enters the next phase of the year well positioned to advance its Perth Basin growth pipeline.
Brokers like what they see
Bell Potter analysts have run the ruler over the recent quarterly, and have a speculative buy rating on the company's shares, with a price target of 15 cents.
As the Bell Potter team said:
Strike is leveraged to the Western Australia energy market where electricity and gas prices are expected to remain supportive. Walyering provides supplementary cash flow while the South Erregulla Peaking Gas Power Project is being developed (online 4Q 2026). Potential exploration success (Walyering West, Ocean Hill) remains a value catalyst. While the West Erregulla timing and development scenario remain uncertain, this asset will potentially be a large source of energy supply.
The Bell Potter team noted that a reserves update for West Erregulla is expected in the current quarter.
They also estimated that the South Erregulla peaking power plant could deliver margins of about $35 to $55 million per year.
Strike Energy shares last traded at 10.5 cents, not far off their 12-month lows of 10 cents.
The shares have traded as high as 23 cents over that period.
Strike was valued at $377.9 million at the close of trade on Wednesday.
