Announcement PDF 15th June 2023 ASX: STX The Company Announcement Officer ASX Ltd via electronic lodgement South Erregulla Update • • • Neighbouring Trigg-1 well result (13.5km) south of South Erregulla (SE) has substantially reduced the risk of Strike’s upcoming appraisal SE campaign. Strike has concluded its pre-FID South Erregulla gas marketing process and commenced detailed negotiations with a major WA industrial gas user for a 20 TJ/d, 5-year binding gas supply agreement. Phase 1 & 2 development: o Strike has contracted globally recognised natural gas solutions business Enerflex to conduct engineering and provide a lump sum priced option for procurement and fabrication of the SE Phase 1 processing modules. o Enerflex estimates that the modules could be fabricated and ready for shipment to Strike between 44 and 48 weeks of the orders being placed, facilitating Strike’s on-stream target date in late 2024. • o Strike estimates the fully fabricated, constructed and installed cost of the South Erregulla Phase 1 Gas Processing facility at $90m (P50 Class 4 estimate) which excludes the cost of the export pipeline to the DBNGP. Phase 3 preparatory activities: o RISC has independently assessed gross 2C Contingent Storage Resources of 4.8 million tonnes which would support the sequestration of the annual estimated scope 1 emissions from the staged deployment of up to four processing modules (40 TJ/d each) for over 25 years. o Strike with Hybrid Systems Australia has deployed its LiDAR wind data gathering system to assess the generation capacity and support future renewable energy infrastructure deployments at the Precinct. Strike Energy Limited (Strike - ASX: STX) provides an update on its operations at the 100% owned and operated South Erregulla gas field in EP503 and the wholly owned 3,500ha Mid West Low Carbon Precinct (Precinct), a farm which is located on top of the South Erregulla gas field. South Erregulla Phase 1 Gas Sales Strike has concluded its pre-FID South Erregulla gas marketing process and has commenced detailed negotiations with a major Western Australian industrial gas user for a 5 year, 20 TJ/day binding Gas Supply Agreement with a high Take or Pay and pricing that is in line with current market conditions and escalated at WA-CPI. Strike will provide further details of this agreement upon completion and execution. The Gas Supply Agreement, once complete, will be used by Strike to underwrite the bankability of the South Erregulla Phase 1 development. Strike intends to keep between 30-40% of South Erregulla’s gas supply uncontracted until prior to start-up or post commissioning in order to optimise the value of the South Erregulla Phase 1 development. strike@strikeenergy.com.au ABN 59 078 012 745 www.strikeenergy.com.au 1, 40 Kings Park Rd, West Perth WA 6005 Trigg-1 Well Result The recent Trigg-1 exploration well result from the Beach/Mitsui JV in EP320 has substantially reduced one of the key risks of Strike’s upcoming multi-well South Erregulla appraisal campaign. The Trigg-1 well was drilled into a structural high on the Erregulla Terrace approximately 13.5km due South of Strike’s South Erregulla-1 well, which flowed 80 mmscfd when on test in June 2022. Trigg-1 successfully found gas but was trapped within a tight (low permeability) Kingia Sandstone reservoir and has subsequently been plugged and abandoned. One of the key risks to the success of the upcoming South Erregulla appraisal wells was the uncertainty as to whether the western bounding Eneabba Fault was providing an adequate seal to trap gas updip of the South Erregulla-1 well. The Trigg-1 result has proven an effective seal is present along the western flank of the Greater Erregulla Complex which can be applied to the South Erregulla gas field, and markedly improves the confidence of a successful result in this upcoming campaign. 3D depth structure map Strike’s confidence in the South Erregulla appraisal campaign is driven by three key factors: 1. The appraisal wells are located structurally updip of the existing successful SE-1 well. 2. The appraisal wells are between two successful penetrations of high quality conventional Kingia Sandstone reservoir (Beharra Springs Deep-1 and South Erregulla-1). 3. Post Trigg-1 there is now evidence of an effective seal along the western Eneabba fault. These key points are visualised on the cross-section cartoon below running between the Beharra Springs fields in the West and the Dandaragan Trough / Tathra Terrace in the East: Strike expects to receive the Ensign 970 rig from Mineral Resources in late-July and will then commence the drilling at South Erregulla-2. The primary objective of the SE2 well is to add to the existing independently certified 128 PJ of 2P Reserves via the conversion of the 178 PJ of 2C Contingent Resources to 2P Reserves by proving continuity of the field updip and on the western side of a small oblique fault which divides the existing Reserves and Contingent Resources. Strike interprets this small oblique fault as a non-sealing fault (similar in nature as those seen throughout the West Erregulla gas field) and will allow for communication between the reservoir on either side. Secondary objectives include additional data gathering and evaluation of the Wagina gas discovery where 91 PJ of 2C Contingent Resources exists and collection of further data from the potential future geo-sequestration target in the Jurassic Cattamarra Formation. Strike has procured the production completions for SE2 and SE3 which will be completed as future producers and on rig release will allow for these wells to be classed as ‘production ready’. Phase 1 Development Strike has contracted Enerflex to perform engineering on and provide a lump sum priced proposal for the procurement and fabrication of the 40 TJ/d South Erregulla gas processing modules under an Engineering, Procurement and Fabrication (EPF) contract, the key terms of which have been agreed with Enerflex (on a non-binding basis). Enerflex plan to use their Canadian facility to fabricate the Phase 1 modules. Enerflex estimates the modules could be fabricated and ready for shipment to Australia within 44-48 weeks from order placement. Subject to timely completion of the engineering and execution of the EPF contract and construction contracts and receipt of all requisite approvals, this timeline aligns with Strike’s target onstream date for the field by the end of 2024. Enerflex may also offer construction services on location at South Erregulla for the hook-up and commissioning of the facility. Strike intends to execute the preparatory construction activities (for example civils) allowing for the application of its low-cost internal capabilities built out from the Walyering gas field development. Strike currently estimates the total installed cost for the 40 TJ/d modular gas plant is $90m (P50 Class 4 estimate) 1 excluding the cost of the export pipeline. Strike has also engaged Nacap to perform a constructability study and develop a cost estimate for the export pipeline and connection into the Dampier to Bunbury Natural Gas Pipeline where 1 Cost estimate is an AACEI Class-4 estimate with an aggregate accuracy range of -30%/+50% based on available inputs and to their relative maturity. Strike is looking at several on and off-balance sheet options for this infrastructure. The pipeline route has been sited along existing cleared firebreaks and private roads to facilitate timely deployment and connection. Precinct Development Strike’s 100% owned 3,500ha farm known as “the Precinct” is a cornerstone of Strike’s long term sustainability program as this advantageous piece of land not only sits above Strike’s South Erregulla gas field in EP503 but also an identified carbon sequestration reservoir. Due to the size, location and surface characteristics of the Precinct, the area is well suited to hosting Strike’s critical gas processing infrastructure, support the deployment of substantial wind and solar renewable energy generation and can accommodate a sizeable carbon farm via revegetation of the previous agricultural land. Strike is in the process of having the land re-zoned for industrial uses by the Three Springs shire and the Department of Planning, Lands and Heritage, which if successful, will provide Strike with the opportunity to offer the Precinct as a location for third party industrial developments which in turn may create localised energy demand opportunities over time. Carbon Capture & Storage During the initial drilling of the South Erregulla gas field in the 100% Strike owned EP503, Strike appraised the Jurassic aged sandstones of the Cattamarra Coal Measures for their suitability and potential use as a future carbon sequestration and underground storage formation. RISC has independently assessed a gross 2C Contingent Storage Resource in these Jurassic reservoirs of 4.80 million tonnes of CO₂. Refer to the below resource tables and Important Notices at the end of this release for information pertaining to the resource estimate. To put this storage estimate in perspective, this is the equivalent of sequestering all annual estimated scope 1 emissions from the staged deployment of up to four modular plants (each 40 TJ/d) over a 25 year period (assuming zero future renewable energy integration). Gross South Erregulla Contingent Storage Resources CO₂ Storage Resources (million tonnes, gross to Strike 100%) 1C 2C 3C 2.20 4.80 9.20 Western Australia is still in the process of establishing its legislative framework for CO₂ sequestration (draft legislation was released for public comment, which closed in April 2023). Once enacted, and it is unclear at this stage when that will be, Strike intends to apply for a Greenhouse Gas Title over EP503 which will provide the necessary tenure for appraisal and sequestration of CO2. Unless and until this key contingency is met, Strike does not have legal right or entitlement to the estimated storage capacity. As Strike looks to expand its South Erregulla gas production, this geo-sequestration asset as part of Strike’s proposed Phase 3 (compression, sequestration and high renewable integration) for South Erregulla may become critical for Strike in maintaining its commitment to being the lowest carbon intensity producer of gas in WA. Precinct Renewable Energy As previously released, Strike has engaged Hybrid Systems Australia to deploy their LiDAR technology at the Precinct in order to capture the wind data to support future renewable energy infrastructure deployments. This equipment has now been deployed. Phase 1 (40TJ/d) gas production at South Erregulla is estimated to consume 1.0 TJ/d of gas in electricity and heat generation (assuming zero renewable energy integration) which would then increase to 2.0 TJ/d post Phase 2 gas production (+40 TJ/d) coming online. This is equivalent to ~$6 million of gas revenues (assuming $8/GJ) and 40,000 tpa of CO₂ production. The majority of the gas consumption and associated carbon emissions could be avoided through the integration of the tier-1 renewable energy at the Precinct, where the size of the opportunity will only increase as compression and (subject to enactment of sequestration legislation) sequestration is deployed in Phase 3 increasing the power load of the South Erregulla infrastructure to potentially 20 MW. The WA Government recently announced $126 million of additional funding for Western Power to commence delivery of the first stage of network investments identified in the SWIS (Southwest Interconnected System) Demand Assessment 2023 to 2042. These network investments may support the connection of any potential wind/solar farm development at the Precinct to the grid where surplus power can be dispatched into the general electricity market. Once data acquisition is complete (which is estimated to take ~12 months), Strike will look to engage third party renewables developers to proceed with planning and development of the renewable infrastructure to support expansion of the South Erregulla gas production facilities after commissioning Phase 1, which is expected late next year. This announcement is authorised by Stuart Nicholls, Managing Director & Chief Executive Officer of Strike in accordance with the Company’s Continuous Disclosure Policy. Company Contact Stuart Nicholls CEO & Managing Director Email: stuart.nicholls@strikeenergy.com.au Media Contacts Paul Ryan (Citadel-MAGNUS) P: 0409 296 511 E: pryan@citadelmagnus.com Additional Information in respect to South Erregulla Contingent Storage Resource: The reported Contingent Storage Resource in the Cattamarra Coal Measures are within the area of 100% owned and operated Petroleum Exploration Permit EP503 and have been estimated by RISC Advisory Pty Ltd (RISC) based on data as 1 July 2023. Strike is yet to secure tenure via a Greenhouse Gas Title over EP503 to appraise the storage resource. As such, Strike currently has no net entitlement to the assessed storage resource. Storage Resources are reported in accordance with the definitions and guidelines set out in the CO2 Storage Resources Management System (SRMS), prepared by the Carbon Dioxide Capture, Utilization and Storage Technical Section of the Society of Petroleum Engineers (‘SPE’) approved by the Board of the SPE July 2017. Guidelines for applications of the SRMS jointly sponsored by the SPE, American Association of Petroleum Geologists (‘AAPG’), World Petroleum Council (‘WPC’), Society of Petroleum Evaluation Engineers (‘SPEE’), Society of Exploration Geophysicists (‘SEG’), Society of Petrophysicists and Well Log Analysts (‘SPWLA’) and the European Association of Geoscientists & Engineers (‘EAGE’) were approved by the Board of the SPE in October 2021. The Storage Resources have been categorised and reported in the category that reflects the degree of uncertainty in the estimated quantities, that is 1C, 2C and 3C. The gross Contingent Storage Resource estimates are un-risked and have a risk of development and securing tenure. Storage Resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional appraisal and analysis, the estimates are likely to change. This may result in alterations to development plans which may, in turn, adversely impact the Company’s operations. In respect to the gross Contingent Storage Resource estimates: • • • • (Aggregation) - The Contingent Storage Resources have been aggregated by arithmetic summation by category, that is 1C, 2C and 3C. As recommended by the SRMS, the 1C, 2C and 3C Contingent Storage Resource estimates have been aggregated beyond the project level by arithmetic summation, hence the aggregate 1C may be a very conservative estimate and the aggregate 3C may be a very optimistic estimate due to the portfolio effects of arithmetic summation. (Permits) – Strike holds Petroleum Exploration Permit EP503 at 100% however does not have Greenhouse Gas tenure to appraise or sequester CO2. (Basis for confirmation of discovery) - The existence of measured and tested permeability in the Cattamarra Coal Measures sandstones was via petrophysical analysis and RCX pressure and fluid sampling via wireline. (Analytical procedures and key contingencies) - The estimates have been determined using probabilistic methods based on the data generated from the South Erregulla 1 exploration well, Maior 2D seismic and other relevant regional data. For the South Erregulla 1 well this includes interpretation of porosity, water saturation and net reservoir thickness from the logging program, the analysis of RCX pressure data and the fluid properties derived from samples and applied to the structure mapping with injectivity factors calculated using analogues and industry standards. The key contingency that prevents the Contingent Storage Resource from being classified as Capacity is the existence of a Greenhouse Gas Title, additional appraisal including injectivity tests and an approved sequestration development plan. Competent person’s statements About RISC: The preparation of the resource estimates has been managed by Mr. Adam Craig who is an employee of RISC. Mr. Craig is a highly experienced Geoscientist and Manager, with over 30 years’ experience in the upstream oil & gas sector working for small and mid-size independents, as well as NOC related entities. He is a Certified Practicing Geologist and member of AAPG, a member of PESA (2021 – 2023 WA Branch President) and a Fellow of the Geological Society. He holds a BSc (Hons) in Geology from Curtin University, Western Australia and is a qualified petroleum reserves and resources evaluator (‘QPRRE’) as defined by ASX listing rules. RISC is an independent oil and gas advisory firm. All of the RISC staff engaged in this assignment are professionally qualified engineers, geoscientists or analysts, each with many years of relevant experience and most have in excess of 20 years. RISC was founded in 1994 to provide independent advice to companies associated with the oil and gas industry. Today the company has approximately 40 highly experienced professional staff at offices in Perth, Brisbane, Jakarta and London, and has completed over 2,000 assignments in 70+ countries for nearly 500 clients. RISC’s services cover the entire range of the oil and gas business lifecycle. About Strike: The information in this release that relates to the RISC resource estimates is based on, and fairly represents, information and supporting documentation prepared under the supervision of Mr Andrew Farley who holds a B.Sc in Geology and is a member of the Society of Petroleum Engineers (SPE), and the Petroleum Exploration Society of Australia (PESA). Mr Farley is the Exploration Manager for the Group and has worked in the petroleum industry as a practicing geologist for more than 21 years. Mr Farley has consented to the form and context in which the estimated contingent resources and the supporting information are presented. Forward Looking Statements Statements contained in this release are or may be forward looking statements. All statements in this release regarding the outcomes of preliminary and definitive feasibility studies, projections and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. These statements relate to future events and expectations and as such involve known and unknown risks and significant uncertainties, many of which are outside the control of Strike. Actual results, performance, actions and developments of Strike Energy may differ materially from those expressed or implied by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. Refer to the ‘Summary of Key Risks’ section of the release titled “Equity Raising and Corporate Update April 2021” released to ASX on 15 April 2021 for a summary of certain general, Strike specific and acquisition specific risk factors that may affect Strike. There can be no assurance that actual outcomes will not differ materially from these statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including the risk factors set out in the aforementioned ASX release. Investors should consider the forward-looking statements contained in this release in light of those disclosures. To the maximum extent permitted by law (including the ASX Listing Rules), Strike and any of its affiliates and their directors, officers, employees, agents, associates and advisers disclaim any obligations or undertaking to release any updates or revisions to the information in this document to reflect any change in expectations or assumptions; do not make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the information in this document, or likelihood of fulfilment of any forward-looking statement or any event or results expressed or implied in any forward-looking statement; and disclaim all responsibility and liability for these forward-looking statements (including, without limitation, liability for negligence). Nothing in this document will under any circumstances create an implication that there has been no change in the affairs of Strike since the date of this release.