Carnarvon Energy is set to make a strategic investment in Strike Energy, acquiring up to 19.9% of the company for A$89m ($58m), issued as fully paid ordinary shares.

The investment aims to capitalise on Strike's extensive gas asset portfolio and Western Australia's growing energy market.

The board of Carnarvon Energy has deemed the investment in Strike Energy as the most favourable outcome following a strategic review and extensive due diligence.

Carnarvon's investment will take place in two tranches. The first tranche involves a A$52m investment for a 13% shareholding, to be completed within five business days of the announcement.

The second tranche of up to A$37m for a final shareholding of up to 19.9% is contingent upon Strike shareholder approval at a general meeting scheduled for September 2025.

Carnarvon chair Rob Black said: “Carnarvon is excited to become the largest shareholder of Strike Energy.

“Following the Bedout JV Operator’s recent decision to delay the Dorado Development, the Carnarvon Board has been assessing value accretive opportunities for shareholders.

“The Carnarvon Board believes the Strike investment represents an attractive opportunity for the company to help Strike unlock the value in its high-quality portfolio of Perth Basin assets on attractive terms, whilst retaining full exposure to its own assets in the Bedout Sub-basin.

“The Carnarvon team looks forward to working collaboratively with the Board and
management team of Strike to deliver value for both sets of shareholders.”

With this strategic investment, Carnarvon secures board representation rights in Strike and maintains its strong balance sheet, with at least A$96m in cash and a $90m carry for the CPC Dorado project.

The company has decided to halt the previously announced potential capital return in favour of this investment.

The funds provided to Strike by Carnarvon will support several key projects including the South Erregulla 85MW gas-fired power station, the Walyering domestic gas project, the West Erregulla gas project and the development of other Perth Basin opportunities.

Strike chair John Poynton said: “We welcome Carnarvon as a strategic partner and Strike’s largest shareholder. Strike has a unique asset base with significant potential and Carnarvon’s investment provides the financial capacity and flexibility to realise this potential.

“Strike remains focused on executing is revised strategy and remains well placed to support Western Australia’s energy transition through the development of its high-quality Perth Basin assets.”

In another development, Strike Energy has reported exceptional production test results from the Erregulla Deep-1 well, showcasing high flow rates and pressures, which bodes well for the future of the West Erregulla project.