Strike Energy Cuts Walyering 1P Reserves by More Than Half to 11.2 PJ

Annual Reserves Review Reveals Downgrade

Strike Energy Limited (ASX, STX) has completed its annual reserves and resources review for the Walyering gas field, revealing a substantial downgrade in its proven and probable gas reserves. The revision follows the production of approximately 8.9 petajoules (PJ) of sales gas during FY25, which generated gross revenue of $72.7 million, aligning with prior expectations.

The independent assessment by RISC Advisory Pty Ltd has reduced 1P (proven) sales gas reserves to 11.2 PJ, down from 23.2 PJ as of July 2024. Similarly, 2P (proven plus probable) reserves have been cut sharply to 13.6 PJ from 38.5 PJ. This adjustment primarily stems from updated production data, particularly from the Walyering-5 well, which confirmed lower connected gas volumes than previously estimated.

Challenges at Walyering-7 and Impairment Impact

The Walyering-7 well has notably underperformed, exhibiting poor productivity and low connected volumes. Currently shut-in pending the installation of compression facilities expected in the first quarter of 2026, this well’s disappointing output has contributed to the reclassification of some reserves to contingent resources. The company anticipates an impairment charge on its oil and gas assets ranging between A$85 million and A$108 million, alongside a deferred tax asset impairment of approximately A$19 million. These figures will be finalized with the FY25 audited financial results, due around late September 2025.

Exploration Plans to Mitigate Supply Shortfall

In response to the reserves downgrade and the potential shortfall against existing gas supply contracts, estimated at around 9.5 PJ on a 2P basis, Strike is advancing plans to drill the Walyering West-1 near-field exploration well in the first half of calendar year 2026. This prospect, located within the same permit area (L23) and 100% owned by Strike, shows promising geological similarities to the Walyering-5 well. Internal estimates suggest prospective resources ranging from 13 PJ (low estimate) to 46 PJ (best estimate), though these remain un-risked and contingent on successful drilling and appraisal.

The drilling plan is subject to rig availability, financier consents, and an independent peer review, underscoring the cautious approach Strike is taking amid current uncertainties. Additionally, the company may supplement supply by purchasing gas on the market as needed to meet contractual obligations.

Looking Ahead

Strike’s updated reserves position and exploration strategy highlight the challenges of maintaining production levels in mature gas fields, especially when wells underperform relative to expectations. The forthcoming compression installation at Walyering-7 and the planned Walyering West drilling campaign will be critical to the company’s ability to sustain supply and revenue streams. Investors will be closely watching the FY25 audited results for confirmation of impairment impacts and further guidance on operational outlook.