Strike Energy : Half Year Financial Report

For personal use only

For personal use only

Important Notices

Forward looking statements

Statements contained in this Interim Financial Report, including but not limited to those regarding the possible or assumed future costs, projected timeframes, performance, dividends, returns, revenue, exchange rates, potential growth of Strike Energy Limited, industry growth, commodity or price forecasts, or other projections and any estimated company earnings are or may be forward looking statements. Forward looking statements can generally be identified by the use of words such as 'project', 'foresee', 'plan', 'expect', 'budget', 'outlook', 'schedule', 'estimate', 'target', 'guidance' 'aim', 'intend', 'anticipate', 'believe', 'estimate', 'may', 'should', 'will' or similar expressions. Forward looking statements including all statements in this document regarding the outcomes of preliminary and definitive feasibility studies, projections, guidance on future earnings 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 Energy Limited. Actual results, performance, actions and developments of Strike Energy Limited may differ materially from those expressed or implied by the forward-looking statements in this Interim Financial Report. Such forward-looking statements speak only as of the date of this document. 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 Energy Limited specific and acquisition specific risk factors that may affect Strike Energy. There can be no assurance that actual outcomes will not differ materially from these statements. Investors should consider the forward looking statements contained in this Interim Financial Report in light of those disclosures. To the maximum extent permitted by law (including the ASX Listing Rules), Strike Energy Limited 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 Interim Financial Report will under any circumstances create an implication that there has been no change in the affairs of Strike Energy Limited since the date of this document.

Project Haber

The successful development of Project Haber is contingent on, among other things, the proving up of sufficient gas reserves at South Erregulla, the outcomes of FEED on Project Haber, access to finance and (where required) equity participation, securing urea offtake agreements, and obtaining all requisite regulatory and stakeholder permits, approvals and authorisations. The concept, feasibility and pre-FEED studies prepared by TechnipFMC on Project Haber to date have been undertaken to determine the potential viability of Project Haber and to reach a decision to proceed with more definitive studies, and as such are indicative in nature only. The studies are based on low-level technical and economic assessments and are insufficient to provide full assurance of an economic development case at this stage or provide certainty that the conclusions of the studies will be realised and that the development of Project Haber will be commercially viable. The results of the study should not be considered a profit forecast or production forecast.

For personal use only

The Board of Directors (the "Board" or the "Directors") of Strike Energy Limited (the "Company") and its subsidiaries (together referred to as the "Group") submit their report for the half-year period ended 31 December 2021.

The names and details of the Company's Directors and Officers who were in office during or since the end of the half-year period and until the date of this report are outlined below. All Directors and Officers were in office for this entire period, unless otherwise indicated:

Summary

Strike's focus during the half year has been delivering the maiden Independent Reserve Certification of the West Erregulla field, the successful appraisal of the Walyering field, advancing Project Haber through Pre-FEED and preparing to drill the South Erregulla 1 well.

Netherland, Sewell & Associates, Inc. (NSAI) certified 300 PJ 2P (150 PJ net to Strike) and 372 PJ 3P (186 net to Strike) gross gas Reserves at the West Erregulla gas field in the Kingia Sandstone1. Considerable upside has been identified by NSAI in the West Erregulla gas field with a further 128 PJ of gross 2C Contingent Resources (64 PJ net to Strike) and 198 PJ of gross 2U Prospective Resources (99 PJ net to Strike)2. The NSAI Reserve certification supports progression of the West Erregulla Project into its Phase 1 of development.

During the last reporting period, Strike completed pre-FEED with Technip Energies for Project Haber3. The completion of the pre-FEED saw the capital estimates decrease by 6% on a like for like basis from earlier feasibility study estimates. Further, the adoption of Haldor Topsoe's SynCOR Autothermal Reformer technology resulted in a 24% reduction in estimated carbon intensity from previous estimates. The strategic importance of Project Haber gained further momentum with the Federal Government awarding Project Haber a $2 million matched grant after the reporting period under the Supply Chain Resilience Initiative and the Western Australian government awarding the project Lead Agency Status. This was followed by the Federal Government's award of Major Project Status to Project Haber after the reporting period. During the half year, the development team also commenced FEED early works and issued the tender for FEED/EPC contract.

The Strike Board of Directors established a Major Project Sub Committee to govern and guide the delivery of Project Haber as it prepares to enter FEED and evaluate proposed EPC contracts. The subcommittee is managed by the Company's Chief Development Officer, Mr. Crispin Collier, is Chaired by Strike Deputy Chairman Mr. Neville Power and includes membership of Non-Executive Director Ms. Mary Hackett and MD & CEO Mr. Stuart Nicholls.

Strike also progressed its Mid-West Geothermal Project through the completion of its heat needle survey as part of its obligations under the Geothermal Special Prospecting Authority (GSPA) for its acreage held in the Perth Basin. As a result of this work, Strike exercised its right to apply for a

For personal use only

Geothermal Exploration Permit (GEP) over the maximum of 50% of the GSPA area (or 1,750km²) to ensure it retains the most prospective areas of the geothermal play. The application is pending as at the date of this report.

WA Gas market

Several major developments have occurred in the Western Australian gas market during the period that align with the Company's development strategy.

In December of 2021, the Australian Energy Market Operator (AEMO) released its annual update on the supply and demand outlook for the WA domestic gas market. The report provided that gas demand will continue to grow over the next decade. Gas supply and demand are expected to be finely balanced for at least the next decade, and despite sufficient plant and pipeline capacity, there are expected to be periods of potential supply shortfall after 2023.

The ongoing strength in the mining and industrial sectors in WA is expected to continue to underpin strong gas demand in 2022. There are several committed projects that are forecast to add increased demand to the WA gas market. A number of resource/refining projects (including: Wodgina, Gudai- Darri, Tianqi, and Odysseus.) are expected to contribute ~78 TJ/d of additional demand over the next decade (base case, and up to 216 TJ/d in the high case).

During the period, Strike remained actively engaged in gas marketing activities across a range of potential gas sales opportunities. Gas buyers have continued to express interest in locking-in firm gas supply for terms greater than 5 years, at market prices that reflect the long-term LNG netback price path. Gas buyers remain very supportive of fast to market gas supply opportunities and gas supply to support lower emissions industrial project developments. These market dynamics bode well for robust market demand as Strike looks to consider opportunities to market volumes for the Walyering development, following successful flow testing in Q1 2022.

West Erregulla

The primary focus for Strike during the half year has been progressing West Erregulla towards a Final Investment Decision. Critical activities delivered include the completion of the appraisal drilling program, which culminated in the booking of Strike's maiden independent Reserve certification by NSAI, submission of environmental approvals by Strike in its role as operator of EP469 for the foreshadowed upstream development and by AGIG for the gas progressing plant and associated mid-stream infrastructure.

West Erregulla - Certified Reserves & Resources

During the half year, Strike released NSAI's estimates and report for the West Erregulla reserves and resources. This report was based on the exploration and appraisal data from the field as at August 2021. The full dataset for West Erregulla is yet to be compiled with additional appraisal activities at West Erregulla currently planned to take place during 2022. However, based on this limited dataset NSAI has certified a gross 2P gas reserve of 300 PJ (150 PJ net to Strike) which is sufficient to satisfy the existing offtake arrangements and advance towards development of the field.4

NSAI has recognised substantial growth potential in the West Erregulla gas field with a further 128 PJ of gross 2C Contingent Resources (64 PJ net to Strike) and 198 PJ of gross 2U Prospective Resources (99 PJ net to Strike) in the Kingia, High Cliff and Wagina/Dongara Sandstones.5

The NSAI Reserves and Resources report was based on the drilling, coring, log, seismic and production testing data from the various strata and exploration and appraisal wells drilled throughout the field.