Strike Energy secures A$153m financing package with Macquarie Bank

In a significant development in the energy sector, Strike Energy Limited (ASX: STX) has announced a strategic refinancing agreement with Macquarie Bank Limited, solidifying its financial position and gearing up for major production upgrades. The total refinancing package amounts to A$153 million, aimed at enhancing Strike’s Perth Basin operations, specifically targeting key projects like South Erregulla and West Erregulla.

The financing agreement comprises three separate facilities totaling A$153 million, orchestrated to refine and expand Strike Energy’s asset base in the Perth Basin. This strategic financial injection is structured as follows:

– A $60 million facility to refinance the company’s existing debt of $16.3 million, coupled with an additional $43.7 million earmarked for development capital. This fund will cover costs at Walyering, West Erregulla, and general working capital needs.

– Another $53 million is allocated specifically for the development of the South Erregulla project.

– The remaining $40 million will support the West Erregulla Gas Project, enhancing the overall infrastructure and production capacity.

Strike Energy Limited teams up with Macquarie Bank Limited for a $153 million financing deal to boost its Perth Basin projects, enhancing production capabilities and financial stability.

The facilities are designed with a 60-month tenure, featuring capitalized interest at a rate of 6% plus the bank bill swap rate. Notably, there will be no principal repayments until December 31, 2026, after which the repayment will transition to a quarterly amortization schedule for the remainder of the loan term.

The drawdown of these facilities is contingent upon Strike Energy making final investment decisions on the South Erregulla and West Erregulla projects and receiving internal approvals from Macquarie. The agreement stipulates that the existing security package with Macquarie will continue to secure the refinanced debt, ensuring continuity and stability in the financial structure.

Strike’s CEO & Managing Director, Stuart Nicholls, commented on the deal, stating, “This financing package provides the funding clarity for Strike’s Gas Acceleration Strategy made up of a series of highly attractive Perth Basin energy assets. The lowering of the Company’s cost of capital is commensurate with the advanced stage and derisking of its production and development portfolio.”

This refinancing move is a strategic play by Strike Energy to consolidate its financial base and push forward with its development agenda in the Perth Basin. By securing lower financing costs and spreading the repayment over a longer period, Strike is poised to enhance its operational capabilities and reduce financial risk. The backing by Macquarie reflects confidence in Strike’s operational management and growth trajectory, which could set a precedent in the energy financing sector.