Strike Energy (Strike) announced Wednesday that the company has entered into a Gas Supply Option Agreement for 30 petajoules (PJ) of gas with Orora, the recently demerged Australasian and Packaging Distribution division of Amcor Limited. The gas is to be produced by Strike from its Southern Cooper Basin Gas Project (the Project) centered on the substantial gas resource identified within permit Petroleum Exploration License (PEL) 96 in South Australia.

The Option Agreement has the following key elements:

Strike has granted an option to Orora for the supply of 30PJ of gas, to be delivered at 3PJ per annum, at a fixed price over a 10 year term from 2017, the expected commencement of production from the Project;

Orora has agreed to pay an option fee to Strike, conditional only upon the PEL 96 joint venture proceeding with a pilot production test project;

Orora can then exercise the option when a decision is made by the PEL 96 joint venture to proceed with development of the Project;

Strike will use the option fee to accelerate the PEL 96 work program following the recent confirmation of a substantial, continuous gas resource directly under the Moomba to Adelaide gas pipeline;

The Option Agreement complements the foundation contract with Orica, announced in July 2013 with the signing of a binding term sheet for the supply of up to 150PJ of gas over a 20 year period.

“The Orora Gas Supply Option Agreement is another important milestone in the rapid commercialization of our substantial gas resource in the Southern Cooper Basin and follows our successful appraisal drilling program completed in December 2013.
This agreement and our foundation gas sales agreement with Orica demonstrate that Strike is well positioned to play an important part in the gas supply solution required to meet increasing uncontracted demand for gas in Eastern Australia."