PERTH (miningweekly.com) – ASX-listed Strike Energy has signed a condensate processing and sales agreement with oil and gas major Santos, providing a monetisation route for its Walyering gas field development.
Strike and joint venture (JV) partner Talon Energy will sell the condensate produced from the Walyering field to Santos via a delivery point at Port Bonython.
Strike said on Wednesday that owing to the high quality of the Walyering condensate, premium pricing to the Brent market price is forecast, with annual gross revenues from the 250 bbl/d production rate expected to be more than A$10-million, assuming an average brent price of $75/bl.
Including haulage and processing-related costs, Strike estimates the breakeven price of this by-product from the gas production is $45/bl to A$50/bl, which, in the current high commodity price environment, provides another valuable revenue and profit stream.
The JV partners sanctioned the development of the 33 TJ/d and 250 bbl/d production facility at the Walyering gas field following the successful appraisal of the field via the Walyering 5 and 6 wells, which delineated a gross 54 PJ of 2P reserves and gross 32 PJ of 2C contingent resources plus 0.8-million barrels of oil equivalent of associated condensates.
Strike said on Wednesday that construction progress at Walyering had been steady, with the foundations and pre-fabricated footings having been dug and installed with pipework and vessels now being placed on site. The construction phase is preparing to move to 24/7 operations and subject to weather events, productivity and trade availabilities remain on track for startup before the end of the quarter.
Talon MD and CEO Colby Hauser has welcomed the deal, telling shareholders that further to the gas sales agreement announced in December, the company was pleased to be working with Santos again to secure a path to market for the Walyering condensate.
“These contracts provide Talon a meaningful revenue stream that will be used to fund our exciting exploration portfolio and is another significant step as we transition to a true exploration and production company.”