Hey, good morning, everyone. Welcome to our quarterly activities report for Q4, for FY24. We'll run this the same as we have been doing recently. I'll hand over to Stu. We'll have a Q&A session at the end. If you could use the Q&A box to put your questions in, and I'll ask Stu at the end of the session. Cool. Thanks. Over to you, Stu.
Thanks, Emma. Good morning, everybody, and welcome to Strike's fourth quarter FY24 quarterly report and financials. It's been another busy and productive quarter for the company, which has been highlighted not only by record production and sales from Walyering, where we generated around AUD 20 million in both gas and condensate sales, averaging around 25 terajoules a day and around 180 barrels a day of condensate. The quarter was also highlighted by the discovery at Walyering-7, where we had 23 m of net gas pay, where we've also been testing that well into the Walyering facility, where all of the test condensate and gas has been sold into Strike's existing marketing arrangements. Realized pricing for the quarter has been up. We're close to AUD 8, around AUD 7.82.
We completed and started receiving the Ocean Hill 3D seismic, which is showing us some very positive indications, which I'll take you through in a little bit more detail later. And then lastly, we announced our AUD 153 million development financing package from Macquarie Bank Limited, which we are moving towards financial close of in this quarter. The company's financials, the company continues to be in good health, with, as I said, quarterly revenue up 13% to AUD 20 million for the quarter, with realized pricing being supported by increased production as well. The company spent a decent amount of money this quarter on exploration activities. There was obviously the completion of the preparations for Erregulla Deep-1, for Booth-1, the Ocean Hill and Kadathinni seismic campaigns, as well as the preparation for future testing activities at Walyering-7.
The company remains in the balance sheets in good nick, as we have a liquidity of around AUD 86 million for the quarter, AUD 39 million of cash flow, and around a cash burn when you net off the revenues and the free cash flow generated from Walyering, around AUD 6 million. And we continue with our AUD 47 million of undrawn debt. That's been boosted by the fact that we haven't had to pay down our remaining AUD 16.6 million of Macquarie debt as we renegotiate the refinancing of that as part of our financial close in the AUD 153 million Macquarie financing package.
In all, I think the company has had a great quarter. I know that some people might say that that's not necessarily reflective of the market price today of our securities. However, we are very proud of the things that we've achieved, and we're very busy operationally as a small business.
Some of those things that we've done from our production and development key series of assets as part of our gas acceleration strategy, highlighting the Walyering-7 well, we took on quite a technically challenging well, which we drilled from the Walyering facility out with about a 1,600-m step out into the Walyering-7 compartment. We discovered 23 m of net gas pay in the A sands and B sands there. We've had those sands individually on tests. We've been doing pressure buildups, taking samples, as well as doing flow tests. Pleasingly, we're seeing gas with a higher heating value than what we have seen throughout the rest of the Walyering field. So you get a higher energy conversion from million standard cubic feet to terajoules per day, as well as a much higher condensate gas ratio.
That testing will conclude in the coming weeks, and we'll put out the final test results from Walyering-7, which should support and continue to boost additional reserves as well as production capacity at Walyering, where we do have some latent capacity in the facility. Moving to our two key development assets, both at South Erregulla and West Erregulla, really meaningful progress at both of those. Unfortunately, at the start of the year, when we saw the South Erregulla appraisal results, not delivered the outcomes that we were looking for, which has been a pretty big shock to the forward strategy. The development team had been working through power economics quite closely and looking at the changing rules in the AEMO for the wholesale electricity market here in Western Australia.
Given that that asset sits inside of the South West Interconnected System, where we have up to 5 gigawatts of electricity demand and adjacent transmission lines, the best way to monetize the 82 petajoules of recertified 2P plus 2C that we now have at South Erregulla is to maximize that through the conversion of that gas into electrons and pushing those electrons into the South West Interconnected System. That can generate a significant uplift from general gas revenues, where we see pricing sort of between that AUD 8-AUD 10 range, where we can generate a look-through that is some 2-3 times higher on a per gigajoule basis.
The project's also supported by the change in the AEMO rules, where the state government now has a capacity credit mechanism, and those capacity credits underwrite a very strong amount of economics for the project, where when you take into account ESS or ancillary services that the peaking power station can provide, as well as energy revenues modeling at an average of AUD 140/MWh with around 4 TJ a day of gas production and the capacity credits between AUD 180,000 and AUD 230,000 per MW, we can see annualized revenues being generated from the South Erregulla peaking power station of between AUD 40 million to AUD 50 million per annum. So a really nice development plan there for South Erregulla, and hats off to the development team here at Strike.
They managed to maneuver the Strike subsurface results as quickly as possible to put ourselves in the best position with that submission occurring in June. We're expecting to hear from AEMO in August whether the project has been awarded capacity, and should that capacity be awarded in August, we'll find out the final price of that in October, as well as the network access quantity. And should that all go the way that we would like it to, that will lead us into a final investment decision at South Erregulla, where we will look to construct the 85-MW peaking gas power station and have that online in calendar year 2026 towards the latter part of the year. So really exciting at South Erregulla.
We've been able to use a lot of the existing approvals, the EPA approvals, and the appeals that were convened over the last quarter and that have been queued. We've been able to retain a large amount of the South Erregulla value by this innovative, fully integrated gas-to-power development plan that we had put forward. At West Erregulla, the large domestic gas project that we have and we share 50% with Hancock, that project received its environmental approval during the quarter. That is a huge boon for that project. We've been working those environmental approvals for about three years now. Similarly, Australian Gas Infrastructure Group, who will provide the build, own, and operate gas processing plant that Strike will toll its gas through, also received its environmental approvals and ministerial statements.
The EPBC approval, which is delegated to the EPA here in Western Australia, is moving through that final sign-off, and we expect to receive that in the coming quarter. That will lead us towards closing out the field development plan with Hancock, as well as completing the third-party midstream access agreements for the Australian Gas Infrastructure Group, 87-90 terajoule a day gas plant. That will lead into a final investment decision at the large West Erregulla gas field. The quarter was also marked by the expiry of the CSBP fixed gas price contract that was struck as a result of the 2018-2019 gas sales option agreement between Wesfarmers and Strike. That contract has expired, and that will move back to its gas sales option agreement.
Strike is working with Wesfarmers to move that back towards a gas sales agreement to support the final investment decision in the coming quarters. West Erregulla and South Erregulla on plan, very large and key parts to our gas acceleration strategy, both on track to achieve a final investment decision and sanctioning. That is underpinned and supported by the AUD 153 million Macquarie financing facility that the company announced during the quarter.
We're well supported by Macquarie Bank and the company, along with its free cash flow generation from Walyering, as our exploration and appraisal activities start to wind down over the coming one to two years, that we will see an ability to fund those projects all the way through to their cash generation where come the financial year 2027, this company will be generating a significant and meaningful amount of cash and free cash flow as a result of the low-cost nature of our developments and the high margins that our conventional onshore gas assets will generate into the West Australian electricity and gas markets. Finally, we also did a minimum holding buyback of the unmarketable parcels at Strike. We reduced the number of shareholders by about 8%. That obviously makes things a little bit easier for the company to manage the administration of its share registry.
And like I said, we finished the quarter with around AUD 86 million of liquidity, which has broken up a bit less than 50% cash and AUD 47 million of undrawn debt from the original debt facilities with Macquarie Bank, with AUD 16 million of drawn debt, which will be refinanced into that AUD 153 million financing package, as I just went through. It was a pretty big quarter for a broader portfolio for some of the assets that don't get a lot of the attention. Particularly, we're about to spud the Booth-1 well in joint venture with Triangle Energy, the operator, and New Zealand Oil and Gas. The rig has been received onto contract and has been mobilized to the Booth-1 well, and we expect that well to spud in the near future. It should be a pretty quick well with a depth less than 3,000 m.
And that is prospective for both oil and gas in both the Dongara Wagina, as well as the Kingia High Cliff Permian sequences. Erregulla Deep-1 in 50/50 partnership with Hancock. This is a large structure that is adjacent to the existing 2P reserves of West Erregulla, just to the eastern side of the field there. It is on trend with the Lockyer and North Erregulla discoveries from Mineral Resources. This is a high-impact well that could add a material amount of new reserves to West Erregulla as we approach that final investment decision. And does give the company a really good amount of upside to look forward to as we start to see the gas markets continue to evolve and pricing dynamics continue to stay elevated.
We reloaded the funnel with new opportunities throughout the quarter, both our large LNG scale targets out to the eastern side of the Dandaragan Trough. This is really frontier stuff, which Strike is well known for. The Arrino and Kadathinni 2D seismic, where we completed almost 500 line km of 2D over an area that is dramatically underexplored. That is across what we call the Tathra Terrace. The Tathra Terrace is a structural extension of the Lockyer and North Erregulla and Erregulla Deep sort of structural setting. Early signs are positive for good imaging down at Permian level, as well as we're seeing some of the large and major faults that bound that structural setting. We'll have more to come as we start to receive processed versions of that 2D seismic in the coming quarter.
On to Ocean Hill, which I'll go through in a little bit more detail. The Ocean Hill 3D seismic, which was shot over the existing 306 PJ of 2C resource, which was certified by RISC in November 2022. That 3D seismic has come in and is looking very positive. We've only got the fast-track seismic cubes at this time, but you can see a substantial uplift in the data quality from the legacy 2D to the new 3D. Importantly, using our proprietary understanding of the reservoir lay down and hydrocarbon migration pathways that we've identified from Walyering, we're able to apply that understanding to Ocean Hill.
You can see at the Ocean Hill-1 well, in the intra-Kingia, there is a reduction in reflectivity as that well passed through that mid-Kingia area, where reservoir quality was quite likely the predominant reason why the Ocean Hill-1 well only flowed minor amounts of gas to surface. So we know we've got a working trap and seal there. Unfortunately, for Ocean Hill-1, the reservoir was the issue there. This 3D seismic for us has already illuminated areas of much better reservoir quality that we can interpret. As we start to receive more processed versions of the 3D seismic cube, we'll be able to do our geophysical work to understand exactly where we want to put that bottom hole location and then start to move that well towards potential appraisal in calendar year 2025. It's a really big piece of upside for the company.
The Ocean Hill-1 well, the gas composition is very similar to that we've seen at Walyering in very low impurity and therefore requiring very little capital to bring that field to market. It's only 4 km away from the compressor station at the Dampier to Bunbury Natural Gas Pipeline. So similarly, much like Walyering, an above-ground tie-in point in an adjacent and proximal area to the field. And this is something that we should all be very excited about. People have been trying to acquire the Ocean Hill 3D seismic since 1991, when the Ocean Hill-1 well was drilled. And it's a massive boon for the company to be able to get the land access and acquire that seismic. And this is something that we are really excited and looking forward to as we continue to progress our gas acceleration strategy.
Just a few comments on the Western Australian energy market. Spot prices have sort of come off a little bit, and that's with the fact that we've seen large domestic gas suppliers come back into the market, particularly from Macedon as well as at the North West Shelf through the Karratha Gas Plant. We did see a period of time during the quarter where there were some unplanned outages at the Wheatstone gas field, and that saw substantial draws on gas storage. If you look at the chart on the top right-hand corner, you can see actually a long-term dynamic that has been unfolding in Western Australia, where over the last 14 quarters, there's only been a top-up or a replenishment of gas storage on three of those 14 quarters.
So as we start to see those underlying stored reserves withdrawn, we expect to start to see the spot price rise as the gas buyers start to come back to the short-term market. Given that we are an electricity-generating aspirant into the Western Australian market, it's key for us to keep an eye on what's happening in electricity markets here in Western Australia. Again, gas made up 42% of the total fuel generation of electrons in Western Australia over the last quarter. That's an important thing to recognize, given that the state government continues to maintain their ambitions of turning off the coal-fired power stations, which do represent about 30%-40% still of WA's daily electricity generation.
The West Australian average electricity price for the quarter was around AUD 80/MWh, with peaking gas pricing of AUD 738/MWh occurring over 120 times in the quarter, with an average of those peak periods of AUD 169/MWh. As you'll recall from our electricity generation and South Erregulla announcement, we're looking at consuming around 8 GJ per MWh. So in terms of that AUD 738/MWh, you're looking at around AUD 82/GJ for gas that's sold into those peaking times. So the electricity market continues to be a very interesting place for fully integrated economics.
We believe that the advantage geographical location at the South Erregulla gas field, which sits underneath land owned by Strike, adjacent to existing transmission lines and future transmission upgrades and extensions, we believe we can make a higher return by generating that gas into electricity than if we were selling it into the West Australian domestic gas market. So we will continue to keep a close look on WA electricity markets as they continue to evolve over the 1-2 years whilst we're in construction, should that project receive its capacity and network access quantity. Finally, the catalysts that we've been sort of chewing our way through throughout the year, we've completed our Ocean Hill 3D seismic. We've drilled and successfully discovered condensate and gas accumulation at Walyering-7.
We completed our recertification of our South Erregulla reserves and released the integrated development plan for gas to power there. We're drilling the Erregulla Deep-1 well. That well is at 3,709 m as of the printing of this report. We did unfortunately suffer 11 days of downtime for the rig there, which was predominantly at the rig operator's cost. That is back underway, and we're back into drilling operations, and we're looking forward to seeing the final results at Erregulla Deep-1 in the coming weeks. That moves us into the Booth-1 well, where we get to sit in the non-operator seat for the first time in a very long time. We're excited to see the results there, and we're hoping for a great result along with the joint venture there.
And then we've also allocated the final well slot that we have for the year to Walyering East, which is a very interesting accumulation. It's 4 1/2 km to the northeast of the Walyering Gas Processing Facility. It has a large structural closure alongside the north to south faults that we have seen as the primary migration pathways for hydrocarbon charge, which is also linked to the reservoir preservation. And we're looking forward to drilling Walyering and that should occur around December. That's timed nicely with the completion of the PGP to DBNGP crossing at Mondara that APA is in construction on. Latest estimates see that that pipeline crossing being available in December, and Walyering East is well timed to potentially create additional gas marketing opportunities for Strike from delivering gas into a broader customer range with a larger short-term liquid market in the DBNGP.
A few things that unfortunately occurred during the quarter. We saw a further delay to the WA domestic gas policy update. That's been pushed into August, and we expect to see that report out in sort of mid-August or so. We continue to lobby the government around some of the benefits that being able to export a portion of our resources and reserves would give to Strike, and that would sort of support an ongoing exploration and appraisal program, particularly whilst we are in a big construction phase with West Erregulla and South Erregulla FIDs slated in the second half of this year. As I pointed out, that West Erregulla ministerial EP approval occurred, and we're really pleased with that as that was one of the last and large items to tick off for us to be able to contemplate that FID.
That really concludes a great quarter by the company. We continue to evolve as a dynamic producer of energy into the West Australian market, and we are continuing to take our assets into development. I think that it's probably fair to say that the current market dynamic for our shares do not reflect what we see as a unique, irreplaceable series of assets that have a very, very bright future in front of them. I would continue to encourage our shareholders and supporters to stay with us on this journey as it's a really exciting time as we look forward towards the second half of our gas acceleration strategy. That's all I really wanted to go through this morning. Thanks, Emma. Open to Q&A.
Well, we've had quite a few questions come in. Just touching on the last bit there that you were speaking about, we've got a question from Richard Cook saying that since the South Erregulla results, STX has lost approximately 50% of market cap. In light of the positive quarterly and continued positive announcements, which would normally result in share price appreciation, the share price continues to trade at multi-year lows. Has Strike engaged or paid for any professional advice in the last six months in regard to the possibility of a hostile takeover?
Thanks, Richard. We do maintain a defense advisor, which is Macquarie Bank Limited, and we do seek corporate advice from Macquarie on a case-by-case basis. I think what you can also see that sort of occurred contemporaneously with those unfortunate results at South Erregulla 2 and 3 was Strike's entry into the ASX 200, which is obviously a market that attracts a lot more long and short funds. The shorts in Strike have risen considerably since the inclusion into the 200.
Advice from Macquarie indicates that the sort of shorts are broken up into sort of three segments. There's the general people that are short anything energy or ASX related. There's probably a portion of the shorts that are related to people expecting downside news from the company. Then there's a last group of shorts where there are a lot of funds that either have to be long or short in the ASX 200.
And with a rapid depreciation in the company's market capitalization on its entry into the 200, I think a lot of those funds defaulted to short. So I expect to see an unwinding of that short position to a degree at the rebalance at the end of September, where Strike is likely to be pushed back down into the ASX 300. And that might see some of the positive news that we continue to generate operationally at the company and financially start to generate share price appreciation.
So it's not long now until the end of September. I know it's a really tough period to keep your eyes on the share price as well as what's coming out of the company. No one's more frustrated than me, Richard, but unfortunately, I'm not in control of that part of the company. All I can keep doing is delivering and executing our gas acceleration strategy as we have been. So I hope that satisfies your question.
Well, we have another question from Matthew Walker. What do you expect quarterly revenues from Walyering will get to after you tie in to the other pipeline and de-bottleneck the facility, and when do you expect this to occur?
Thanks, Matt. Right now, we are focused on ensuring that the Walyering-7 test is completed, that the total reserve and resource position of Walyering-7 is incorporated in our understanding of the available volumes for sale from Walyering, and then tying that well permanently into the Walyering facility. That should allow the company to start to use some of the spare capacity in the plant. That will lead us towards the latter part of the year.
Gas marketing activities right now have not kicked off for our DBNGP volumes. It's something that we're looking at. We do have a couple of customers that we have unfortunately disappointed through the South Erregulla appraisal program, where those gas contracts unfortunately will not go through to sales due to the fact that the South Erregulla field is no longer a domestic gas project, but a gas-to-electrons integrated development. So we're discussing how do we deliver additional gas to those customers through proposed connection between PGP and DBNGP, and we'll make further disclosure on that as it comes.
Well, a question from Scott Ashton. Does the realized gas price of AUD 7.82 per gigajoule for the quarter reflect a weighted average price, or is there a spot component to this, or is it all the Santos GSA uptake?
Thanks, Scott. It's both the Santos GSA as well as the Alinta GSA, as well as available volumes that we deliver into those gas contracts, which also have their own individual pricing dynamics. As you will recall, the Santos contract is US dollar denominated. The Australian dollar continues to float around in that 65-67 cents per US dollar range. And so you do see some volatility on the gas prices achieved based on that exchange rate. The other thing to note is that our condensate volumes are also US dollar denominated as we sell those into condensate marketing arrangements at Port Bonython. And that will also generate volatility in our revenue generation through that US dollar exposure, as well as international Brent prices moving around.
Well, one here from Mark Wiseman on West Erregulla. Is there a gas price formula framework in the 2019 gas sales agreement, or is this effectively a fresh price or terms negotiation for that 100 petajoules based on a strengthened market?
Yes. So the gas sales agreement option, without sort of breaching any parts of the confidentiality there, Mark, does have a formula. And we did indicate at the expiry of the fixed gas price that when Strike conducts and executes that formula, it does result in a price that's much closer to the current market price of gas in Western Australia. Unfortunately, I can't divulge what that formula is. It's part of a confidential agreement between ourselves and Wesfarmers, but we have tried to provide some indication of where we think that our gas pricing is going to go should Wesfarmers execute their option and convert their 100 petajoules from an option back into a gas sales arrangement.
Got an interesting one here from Scott Ashton. If Booth-1 result is a commercial success, how would Strike look to monetize its equity interest? I.e., would we stick around for a development or divest? And do we have sufficient funds to participate in further appraisal activities in L7?
Great question, Scott. We picked up these assets through the acquisition of Talon Energy late last year. This was a farming arrangement that Talon had made with Triangle Energy. Given that the business was not receiving any value for these assets, we continued to push forward and participate in the wells. I would say, given that it's our only non-operated position in the basin, if we had any non-core assets, these would probably be it, given that we're the non-operator in that. However, we are in the business of discovering and producing oil and gas, and we'll wait and see what that well result delivers us before we make any decision.
We do believe that there is some prospectivity for gas and oil accumulations in the Booth-1 well. Strike has had quite a bit of condensate upside at Walyering-7, and we've just recently completed a 1,000-hour test on a gasoline generator with a load connected to it. And we have seen that our condensates from Walyering can perform the role of gasoline in a gasoline-generating engine. So depending upon what we see at Booth-1, Scott, whether it's gas or oil or both, I think we'll make a decision from there. There's no hard and fast rules for what we plan to do going forward.
Stuart Howe has a question on the West Erregulla FID. What are the conditions precedent now for it? Do you need all of the AGIG binding terms and agreement, a WA domestic gas policy update, a new Wesfarmers GSA, and then JV approval? Do you need all of these or just some or anything else?
I think seeing the WA domestic gas policy update presented is a key piece of information that would allow Strike to inform its gas marketing activities going forward. We obviously have that option arrangement with Wesfarmers. We do see that as the foundation of the financing f ield development planning, which is underway between the two parties. The gas needs to go somewhere, so concluding the development agreement and gas processing services agreement with Australian Gas Infrastructure Group are also critical documents for the Strike board in order to be able to contemplate an FID.
Pleased to say, on all fronts, material progress continues to be made over the last quarter and in front of us, and we don't see a huge amount of unagreed key commercial situations between now and being able to take FID. So that project continues to de-risk and is on its way, I'd say, to a development decision. We've been waiting for a long time. So the company is very excited to get West Erregulla into development and construction as it forms a key part of our cash generation as part of our gas acceleration strategy going forward. Thanks, Emma.
Well, Mark Wiseman's got another one on Ocean Hill. Do you intend to conduct a farm-out process prior to drilling Ocean Hill-2?
It's a good question, Mark. So long way about answering this one. So I've put a challenge to my drilling and completions team to demonstrate to me just how cheap they can make a Jurassic well. And we'll be looking to conduct that at the Walyering East drilling. The preliminary numbers that I have seen are very competitive for well costs in the basin.
Should we be able to deliver a Walyering East well at the prices that the drilling and completions team have set themselves the targets for, I would say that the small amount of capital required to see that first Ocean Hill-2 well is something that is well within the company's financing and something that we would probably want to see at 100%. Things like the large Permian structures out to the eastern side of the Dandaragan Trough in Arrino and Kadathinni continue to be very large amounts of future upside to the company, but with the deeper Permian wells probably out of reach of the balance sheet of the company whilst we're going into this large construction phase.
And I would say that those are some assets that we may contemplate looking to farm out in the near term, sorry, over the next year or so as we start to receive processed volumes of the seismic over there, because I think that they represent some big structures that can attract third-party interest. For us right now, with a very low cost, there's potential to see the result of Ocean Hill- 2 as well as the very low development costs. We completed the gas processing facility at Walyering for AUD 24 million, the well completions for AUD 5 million. And I'm pretty sure if we had our time again, we could do it a lot cheaper and faster than what we did it, noting that Walyering went from discovery to first production in 21 months.
So I see Ocean Hill as a really big return lever for the company, that large 2C 306 petajoule resource. And we're so close to seeing the result of that next well. If it is well within the company's financing ability, I think that we should retain 100% going into that well.
Well, and this next question is quite relevant. Matthew Walker is asking, you have just said that Ocean Hill is an exciting prospect and of potential significant value. So what is your opinion on why the most recent Macquarie research report attributed AUD 0 value to any prospective resources in your portfolio, including Ocean Hill?
We've got to unmute the participants and get Mark Wiseman to respond to that one. But no, it's all good. I can understand that after the back of the South Erregulla 2 and 3 wells, that's quite very quickly demonstrated that we are an upstream business and that we do and will continue to face upstream risks, particularly inherently in our exploration and appraisal aspects of our business. Ocean Hill, I think, because it had a well drilled in 1991 and produced non-commercial rates of gas to surface, there's obviously a level of skepticism around the ability to generate conventional commercial flow rates of gas from that structure.
However, I think the company's track record of doing that exact same thing at Walyering and really getting underneath the hood of the Jurassic Cattamarra Formation and understanding how those sand channel fairways have been laid down, how we identify those on seismic, and how do we target the areas of better reservoir development in order to be able to generate the flow rates that we've seen, we can apply those learnings and understandings to Ocean Hill. The last Ocean Hill, Walyering, to give you a little quick history lesson, we had a discovery in 1971, flowed 13 million standard cubic feet a day, followed by two wells that flowed single-digit million standard cubic feet a day. That nothing happened until about the year 2000 when a Walyering- 4 well was drilled into a water-filled compartment of Walyering.
And then Strike came along some 20 years later and demonstrated a flow rate from Walyering-5 of 78 million standard cubic feet a day. So we are looking to apply the exact same recipe that we have worked our way through at Walyering. Walyering has always been the dress rehearsal for Ocean Hill, and we're excited to get after it. And all we can do is continue to point to our track record and demonstrate that we are a successful explorer, appraiser, and developer of gas assets in the Perth Basin. And that Ocean Hill does, in our opinion, represent an amount of upside that should attract evaluation today. So encourage Mark to review his valuations. And Matt, thanks for pointing that out.
Declan has a question on how many more rig slots are there as part of the rig sharing with MinRes and other exploration drilling for STX in calendar year 2025?
Yeah. So our last exploration appraisal well that we have, there was a single slot left, is the Walyering East well, which we've announced today. Next year, you're subject to cash generation from Walyering. We may have a slot for Ocean Hill 2 in the first half of next year, but we're really moving into development drilling at West Erregulla. So those slots are earmarked for West Erregulla post-FID and are contingent on taking a final investment decision at West Erregulla. So we're really starting, as you can see, the cash burn from the quarter has really been heavily skewed towards exploration and appraisal. Those are really one-off items for us. We're going to see that wind down considerably.
As we start to move into development and construction of West and South Erregulla, the financing for those projects is subject to those final investment decisions, which we've identified through the Macquarie financing facility. So outside of Ocean Hill next year, which, as I said, is subject to additional gas and cash generation from Walyering, we are starting to move into a more construction phase for the next one and a half years. Well, Scott Ashton is asking for an indicative cost for West Erregulla. Is AGIG still a build-and-operate model with a tariff? And is the expired CSBP contract a key requirement for you to move towards FID? Yes to all of the questions, Scott. So the Australian Gas Infrastructure Group is, yes, it is a build-own-and-operate model with Strike tolling its gas through. So rather than CapEx, it's an OpEx for the company.
So we'll toll that through. Obviously, prices for construction have risen in the background since we first contemplated trying to take West Erregulla to development without, unfortunately, those environmental approvals taking a considerable period of time. Of our, let's call it, 45 terajoules a day share of gas production net to Strike from West Erregulla's proposed development, 25 TJs could be earmarked for Wesfarmers. It does require them to convert their option to a gas sales arrangement. And that's something that we continue to prosecute with Wesfarmers in advance of a final investment decision.
So what value has Strike added to the assessment of prospectivity for the Booth-1 well? Do you have a chance of success? We haven't published our own prospective resources for Booth-1. We continue to support the operator, Triangle, there, and we'll wait to see what that well delivers before we start talking any numbers. Another couple from Matt Walker. While you say exploration costs are winding down, you're planning to do a lot more building. So can you comment on the medium-term cash flow and liquidity outlook and whether any capital raising will be required to cover all anticipated CapEx, including allowance for possible overruns?
Yeah, thanks, Matt. As you can see, Walyering's moving its way to its AUD 80 million+ cash flow generation per quarter, very high margin, AUD 0.60 per gigajoule production costs outside of some royalties and paying off the Strike overhead. There is a decent free cash flow generation and EBITDA that will come out of Walyering. When we start to move the projects through their construction into construction, each one of those projects comes with its own unlock of development financing from Macquarie. As I've indicated, with the AUD 153 million and the forward outlook for Walyering, the company is funded to deliver its gas acceleration strategy. Activities outside of that strategy remain subject to higher production rates at Walyering and cash flow generation. So that's where we sit at the moment.
Given that South Erregulla and West Erregulla are very discretionary activities, we would see the sequencing of those projects as critical for the company to avoid needing to raise any equity, given where the operator in both situations, we've got an ability to influence timeframes, and the company has currently no intentions to come towards the equity markets to fund the development of those two assets.
Cool. You touched on this a bit before, but there's still a few questions coming in on it, and I'll just try and wrap them all up into one. But regarding the shareholdings, what actions have the board taken to mitigate market manipulation? And has there been any reported have you reported these actions to the regulators at all?
Without sort of going into any details that aren't really required for public consumption, I am deeply frustrated by the continued delivery of success at Strike post the unfortunate results of South Erregulla, which has not shown in any sorts of price appreciation. We do see the short position at Strike as a fairly material overhang on the company's share price at the moment, as well as final costs for West Erregulla and South Erregulla not having been delivered into the market just yet for us to demonstrate that there is no need for equity. So work with us, and I think that you'll see that that share price should start to appreciate.
As I said, the rebalance of the ASX 200 in September and the clarity on Strike's financing positions as we move to financial close with Macquarie Bank and start to get the FID-related numbers of both West and South Erregulla into the public domain. So yeah, it is a challenging situation, and we continue to monitor the share registry, the short position. But really, at the end of the day, my job is to deliver gas and condensate projects into the Western Australian energy market. I believe that that's the best way to appreciate the value of the company. That's where I spend the bulk of my time.
Cool. Do you anticipate Gina Reinhart looking to take over Strike at some point?
Like I said, I believe Strike has explored its way into an irreplaceable series of assets at a very unique time in the energy transition of Western Australia. I see our gas fields as supporting long-term gas demand in both electricity and industrial gas markets, where we have a large industrial gas market here in WA.
The integration of the South Erregulla project into peaking gas power is exactly what the state government and the federal government are looking for as the state rolls out additional renewables, batteries, and starts to unwind the coal. So I don't see another company in the state with similar assets and diversification across multi-geological segments and a large wholly-owned operated position like Strike has. And I can imagine both energy users, energy producers could covet these assets at some point in time in the future. All we can do right now is continue to deliver our sort of de-risking outcomes and move these assets through into production. I would note that Strike is on the verge of receiving its production license for West Erregulla. That will be the third production license we've received across our suite of assets.
I think that's the only three production licenses that will have been issued in the Perth Basin since Strike entered into the basin, with Waitsia and Beharra already producing into their existing license arrangements. We've also received environmental approval across three gas fields, which is pretty unique on an Australian setting. So as those projects move from prospective to likely and probable, I think that the realization that they are going to be moving into production starts to improve the attractiveness of those to future shareholders, investors in our story, and anybody else that may want to invest in those in other ways.
Cool. A little follow-on from that. We've probably got time for a couple last quick ones, but there are others coming in. If we don't get to them, feel free to reach out to me via email or phone. But on Hancock, can you please comment on the JV relationship at West Erregulla, including the AGIG build-and-operate, in as much as is it all tracking positively and proceeding as planned?
Like I said, we are on our way to a final investment decision. We've got a couple of outstanding items on the field development plan, but that's largely documented between the two joint venture partners there. Both parties ascribe to the Australian Gas Infrastructure Group build-own-and-operate model for the gas processing of the gas from West Erregulla through into the Dampier to Bunbury Natural Gas Pipeline. So all in all, we see a positive relationship with Hancock. And we wouldn't be saying that we wouldn't be able to move that asset towards final investment decision if it wasn't the case. So yeah, pleased with how things are going.
And on the peaking power plant, has there been any feedback from AEMO? And what date is the decision made?
Yeah. So this peaking power station is very uniquely placed at the northern end of the South West Interconnected System where generally power, when the wind is not blowing, flows from Perth up to Geraldton. That's meant that the northern end of the South West Interconnected System has suffered from considerable intermittency over the last few years as the legacy 34-year-old Mungarra gas power station has reached the end of its life, really. It was asked to turn on last year, and it was incapable of doing so. Post-Cyclone Seroja, the grid in the northern end of the SWIS was unable to be re-energized as there was no thermal or spinning reserve capacity up there.
So we see the development of the South Erregulla Power Station as a really critical piece of infrastructure to the northern end of the South West Interconnected System. For those political spectators here in Western Australia, people will realize that the WA government is inherently linked to the electricity dynamics in Western Australia through their ownership of Western Power as well as Synergy, the poles and wires, and also one of the major gas electricity generators. So we do see a strong support from government for this power station, and that trickles all the way through to AEMO. AEMO need to go through their process in August for capacity allocation and award. We've put our best foot forward. We've put our South Erregulla peaking power station forward as a committed project.
So subject to the award of that capacity and the network access quantity from Western Power, where we have received a letter of support for our project to the AEMO submission from Western Power and from members throughout the state government departments. On receival of that network access quantity, we believe that we'll be able to take that project into construction. And so we're eagerly awaiting that information in August that we've been awarded capacity and then that resulting price of that capacity in October.
Cool. And I think we'll finish on one last one because if I don't ask this, there'll be rumors everywhere. But have there been any takeover approaches from other parties in the last three months?
If there was anything to disclose that the board of directors deemed as material price-sensitive information that the shareholders needed to know, we would have released that. That's all I need to say on that matter. Thanks, Emma.
Cool. There was one last one that wasn't a question, but congrats on a fantastic quarterly. The share price sucks, but there's huge upside. Well done to you and the team. We'll finish on that.
Go well. Cheers, everybody. Cool.
Thanks, guys. See you.