Good morning, ladies and gentlemen, and welcome to the 2024 Annual General Meeting of Strike Energy Limited. Firstly, let me apologize. There's not sufficient seats for everybody. We're delighted that so many of you joined us, and we've undercatered, so I apologize for that. My name's John Poynton, and I'm the Chair of Strike Energy. First, I'd like to acknowledge the traditional owners of the land on which we meet, along with the lands on which we conduct the activities in the Perth Basin, and pay our respects to their elders, past, present, and emerging. I also pay my respects to Aboriginal elders of other communities who may be present. This year, we're holding the AGM in a virtual format, but are also pleased to have you shareholders join us in person in Perth.
This format allows shareholders and their proxies to have the ability to ask questions and submit votes on the polls in real time. We have the necessary quorum present, and I declare the Strike Energy Annual General Meeting open and confirm that online voting for all items of business is also open. Please note that you may submit your vote and any questions for each of the resolutions via Lumi at any point in the meeting. Any questions will be addressed at the appropriate time. At this point, I would also like to introduce my fellow directors present today: Managing Director Stuart Nichols, Deputy Chair Neville Power, Stephen Bizzell, Mary Hackett, and Jill Hoffmann, along with our Company Secretary, Justin Ferravant. I must also pass on Andrew Seaton's apology, our other non-exec director. He's in the UK at the moment and unfortunately couldn't be present with us today.
I'd also like to welcome David Newman, who is also representing Deloitte, the Company's auditor. David's available to answer questions with respect to the auditor's report and the conduct of the audit. Thank you, David. The format I propose for the meeting is firstly to present my address as Chair, after which I will hand over to our Managing Director, Stuart Nichols, who will provide a presentation of the Company's activities and plans. At the conclusion of Stuart's presentation and any questions that may arise, I will deal with the formal business. Shareholders have the opportunity to ask questions either in person here at the meeting or via the Lumi application. And I know some of you have already done that, and I look forward to responding to those questions in a few minutes.
It's a privilege to address you today as we reflect on the challenges we've faced while making significant strides towards our vision of becoming a leading player in Western Australia's energy transition. I'm proud to highlight the transformation brought about by the Walyering gas discovery. In a record 21 months, we safely brought Walyering online, transitioning Strike from Explorer to Producer and resulting in Strike's maiden gas revenues. This investment has already paid itself back, reaching that milestone inclusive of operating costs by May of this year. Quite an achievement. During the year, we acquired our joint venture partner, Talon Energy, securing 100% ownership of Walyering and the surrounding EP447 exploration acreage. Increasing Strike's exposure to Walyering has positioned us to fully capture the benefits of Walyering's proximity to gas pipeline infrastructure, enabling production to be well supported by the domestic gas demand.
Its low-cost and low-carbon intensity gas production generates robust cash flows and reduces the Company's reliance on equity funding and builds the capacity for attractive debt financing. Earlier this month, Stuart and I toured the Walyering facility with the Federal Minister for Resources, the Honourable Madeleine King. She was very impressed with the facility. The processing facility is powered 100% by solar and batteries, minimizing Scope 1 and Scope 2 emissions and highlighting Strike's commitment to sustainability. With its unique capability to deliver low CO2 natural gas, Walyering enables some of the lowest cost and lowest carbon-intensive gas supply to the WA domestic market, an embodiment of Minister King's Future Gas strategy. However, it would be remiss of me not to address the challenges we have faced this year.
The non-commercial tests from the South Erregulla Two and Three appraisal wells were a significant disappointment, and the resulting downgrade in our market value was, as I've said before, brutal and disproportionate in our view to the percentage of Strike's resources that were affected by them. In response, Strike has chosen to take an innovative and bold approach. Within four months of those suboptimal results at South Erregulla, we proposed an alternate development pathway via a fully integrated peaking gas power station. I am pleased to say that just today we have taken a final investment decision for this project, where the economics have not only become more attractive since its initial proposal.
By providing a highly flexible, lower carbon-intensive firming electricity source when compared with coal, this development is designed to complement the expanding renewable generation and support WA's transition away from coal-fired power by the end of the decade. This FID at South Erregulla takes us into the second phase of our government-endorsed gas acceleration strategy, which aims to fast-track the exploration of our existing reserves and the proving up of additional reserves across our Perth Basin assets. Strike has been progressing another leg of this strategy at the neighboring West Erregulla development, where we just made a significant new gas discovery with the Erregulla Deep-1 well. Erregulla Deep may have a substantial new gas resource and positive implications on the existing reserves at West Erregulla.
Erregulla Deep was drilled down to 5,250 meters, beating Strike's own depth record and highlighting the unique operating competencies that Strike has built out over the last several years. Bringing West Erregulla into development, appraising Ocean Hill, and on success pursuing a faster market production stream represents the exciting next phase of our strategy. Within the basin, M&A continues to be hotly pursued with over AUD 4 billion in transactions within six years. Our shareholders can take great comfort from Mineral Resources' sale as it reinforces the underlying value of Strike's attractive and unique portfolio of assets in the Perth Basin. I would like to express my deepest appreciation to our dedicated and passionate team at Strike. Despite being a modest-sized company, Strike consistently achieves outcomes that rival larger peers. It is their expertise and drive that enable us to deliver on our ambitious goals.
I would also like to acknowledge the dedication and commitment of my fellow board members who've been called upon many times to meet outside the set board agendas and calendars. Your directors are all focused on delivering value to all stakeholders and have significant skin in the game as well. A special thanks to our CEO and MD, Stuart Nichols, who along with his management team continues to lead this company to think outside the box, as demonstrated by some of the initiatives I've discussed, and to achieve remarkable outcomes even in the face of adversity. Finally, a sincere and heartfelt thanks to you, our shareholders. We recognize that this year has been challenging, and we are deeply grateful for your continued support. Looking ahead, we are determined to build on last year's successes, overcome setbacks, and cement Strike's position as a leader in the West Australian energy sector.
We are excited for what the future holds and look forward to reporting back next year with further progress. I will now hand over to Stuart Nichols, who will provide you with an overview of the Company's key achievements during the 2024 financial year. Thank you, Stuart.
Thank you, John. Thank you, shareholders, for attending the 2024 AGM. It's been a really big year for the Company. I know that it has not been reflected fairly in the share price this year. However, I think it's fair to say that some of the operational achievements that this Company has gone through this year have been near on astounding. When I start to think about the business some six or seven years ago that John and I took over and started to build, you know, it's at this time that I've realized that our people are starting to become some of our best and most crucial assets. Our people are that we are, you know, we do things safer than the industry. We do things that are greener than the industry. We have a more diversified workforce.
We have a much higher female participation rate at Strike than what we have seen in our industry by orders of magnitude, which is an even 11% increase on the number of women we were employing last year. Also, we're younger than the industry. However, really importantly, is that that does not sacrifice on quality. We are achieving operational outcomes that rival those of much larger industry peers. We have drilled the deepest well ever drilled onshore Australia. We've found the deepest hydrocarbons ever found on the Australian continental plate. And not only are we doing that from a small business with very small resources and a small balance sheet, we have made the very difficult transition from energy explorer to producer. We've produced 10 petajoules of gas and condensate in the last year. We have shot two incredibly important seismic campaigns.
We've drilled five wells in the portfolio, two of which made major new gas discoveries at Walyering-7, which we have already completed the tie-in to the facility, and we're just getting ready to turn that on, as well as the major Erregulla Deep-1 gas discovery, which has got not only a major resource base underneath itself, but also has implications on upgrades at the West Erregulla gas field as well. Then, as I said, these operational objectives sit behind a corporate ambition where we participated in M&A this year. It's our third piece of M&A ourselves in the last five years since we entered the basin, acquired UIL, participated in the Warrego M&A, and then finally this year acquired Talon.
We are doing a lot with a very small number of people, and I recognize that this business is equal parts actual capital and human capital, and that's driven from our board, from the management team, all the way down to the employees who are well represented here today. And I'm really proud to be running Strike in 2024. One of the great achievements of our Company is that transition from explorer to producer. This is a remarkable story. Walyering was only just a bit over 12 months ago that we were in a pre-revenue business.
To talk about the profound impact that that has had and how successful Strike has navigated those challenges, not only did we construct and bring the facility online at a cost and a speed that is the envy of our industry, we built this facility for AUD 700,000 per terajoule a day of capacity, where just further up the road, they're still yet to finish many years on and at a cost of at least AUD 5.2 million per terajoule a day of processing capacity. These achievements are orders of magnitude more impressive than what is occurring to some of our neighbors around the area. The facility itself has run exceptionally. Kevin and the operations and production team have had an availability on uptime of more than 98% since we started. Many people thought we would never become a producer, let alone a reliable supplier of Western Australian domestic energy.
The facility itself, we will be able to take value from what we have learned and what we have done at Walyering. It's 21 months from the discovery well to bringing it online, and we're going to apply that at Ocean Hill. Ocean Hill is a large 306-petajoule Jurassic structure. It was a discovery in 1991. It has a very similar history to that of Walyering. We now have the engineering capabilities, our own internal EPC self-deliver model that we know is successful at driving out costs and increasing delivery speed, and this is something that we're going to continue to benefit from. This project is not only the foundation of the financial architecture that underpins our Macquarie facilities that you saw that we recently increased to AUD 217 million package only two days ago, but this asset here epitomizes everything that is about Strike.
I think that we should all be very proud to see that going into its second successful year of production operations. Today is a great story about how those people at Strike used the assets that they had discovered and rallied very, very quickly. It was only in February this year that we received some very anomalous petrophysical results that resulted in some difficult flow testing outcomes at South Erregulla Two and Three. To say that the business was flawed by those outcomes and those were unexpected is an understatement. However, in the space of four months, we managed to take and salvage the South Erregulla project from being backfilled to West Erregulla at some point in time in the future to being now FID'd today as West Australia's first fully integrated peaking gas power station.
It's testament to the development team, to the board, who recognize that we have an interruptible gas supply sitting inside the South West Interconnected System, the Metro Transmission Network here in Western Australia, where the increase in reliance on intermittent renewable energy as we phase out coal here in WA will mean that there is an increasing importance to firm the grid with peaking gas power. The problem that we have in Western Australia is the gas is becoming less available and is becoming more expensive. So new gas-fired electricity generation, particularly new peakers, aren't being built. The youngest piece of gas-fired electricity infrastructure in Western Australia is already 11 years old, and most of them are between 15 and 34 years old. So we haven't been replacing these pieces of infrastructure with more modern-day, more efficient pieces of technology. That's exactly what we've done here.
We saw the Western Australian AEMO change the rules on how the capacity market would work, and very quickly our development team convinced our board that this was a great way to take these lemons and make lemonade at South Erregulla. We have taken a smaller amount of gas, and we're generating a far bigger NPV than we could have possibly ever imagined from 45 petajoules of 2P reserves. We've done that through integrating into gas-fired peaking electricity. We successfully navigated the rules through the AEMO process. We were awarded capacity credits and network access quantity.
This project will be underpinned by payments from the government every year to the tune of $18-$30 million or so, depending upon the capacity price, to allow us to be there ready to make sure when the sun's not shining and the wind's not blowing, that we keep the lights on here in Perth. That's another fantastic and really proud moment that I think that this Company can have is that we are fundamentally underpinning the economic prosperity of Western Australia through ensuring that our energy system remains stable, reliant, and competitive. This is also the beginning of a journey for Strike in its energy precinct, something that we've been speaking about for several years.
You can see in this picture here, the yellow outline is the farm that we acquired many years ago, the red polygon that sits underneath it, the South Erregulla farm, the South Erregulla gas field, and the black line is the production license that sits above that. We have subsurface rights. We have surface, we own the surface, and then we have the tenements that sit over the top to make this an integrated, incredibly low-cost development and source of energy into the West Australian electricity market. Through owning our own molecules, we will be the lowest-cost provider of peaking electricity to come into the market. We've recently seen some changes to the West Australian electricity system in both supply and demand, which means that the modeling that we had done in June to convince ourselves that this was a great idea has only improved since then.
We have now got capacities from 19%. We now think that the station will be online around 30% of the time. We've seen a cap price of electricity in Western Australia rise from AUD 734 a megawatt hour to AUD 1,100 a megawatt hour. We've seen the capacity price that will underpin the payments by the government to keep our spinning reserve here move from AUD 18 million for the first year to up to AUD 31 million for the second year. The Western Australian energy market is in transition. The state government is the biggest producer of electricity in WA, which they produce predominantly from coal-fired power. The state government is committed to exiting that coal-fired power, which will put us in a volatile, highly unpredictable transition that will be protracted.
It is that volatility and that protracted environment in which this piece of infrastructure will allow us to maximize every gigajoule of gas that we have at South Erregulla. To give you an idea, we would be selling South Erregulla gas if it was still a domestic gas project at AUD 8-AUD 9 a gigajoule. At the forecast average electricity price that we've modeled for the project, we will be selling that on a look-through basis at closer to AUD 18 a gigajoule. That is the value incremental improvement that we get on converting our gas or connecting our reservoirs directly to the transmission network here in Western Australia. And it's a very amazing day on the AGM that we've been able to take our final investment decision. The board obviously has confidence in management being able to deliver this. This is a next step in our competence and capability.
We are going to self-perform the execution, much like we did at Walyering, and that's how we believe what we can deliver and the schedules and the costs that we've projected to the market only just this morning. While we're able to continue to be well supported by our financing at Macquarie Bank Limited, it's a really great project and the start of an energy precinct here in Western Australia that will underwrite the grid for a long time to come. When we talk about the year that we've had, we've obviously had some revisions in some of our reserves, but we have had a lot of exploration success as well, both at Walyering-7 and Erregulla Deep. Erregulla Deep is the deepest well ever drilled, as John pointed out earlier. That well is an operational feat unto itself, but it is also geologically amazing.
To find reservoirs and gas quality at the depths that we did is something that will be written in textbooks going forward. That underlying resource will have a profound impact to an increase in 2P reserves in EP469 for both ourselves and our partner, Hancock Energy. We intend to complete 3D seismic over the coming harvest period prior to remapping the field and seeing the implications that those lower contacts may have at West Erregulla on a potential reserve upgrade at West Erregulla, but also the conversion of the 2U prospective resource at Erregulla Deep to 2P reserves. This is the first time we put out the new polygons of Erregulla Deep and the impacts that it has on West Erregulla. So there are some changes in the map there for those keen eyes out there. It has been a fantastic outcome.
Addressing our portfolio of resources and reserves, we, as John said, we're on our gas acceleration strategy. The development of West Erregulla and bringing those reserves online is incredibly important to Strike. It's one of our largest sources of gas. It is a highly productive gas field, and it's something that we've been working in development for three and a half years during the approvals process. You may have seen in the paper, and it was mentioned by John, that Hancock Energy, our non-operated partner at West Erregulla, recently acquired the Mineral Resources acreage to the north, which includes the block here in the North Erregulla gas fields. That acquisition, I think, has taken everyone from Mineral Resources to Hancock to other participants in the basin by surprise. The speed at which that occurred and the necessity to sell those assets was probably not foreseen many months ago.
However, we intend to be a good joint venture partner and a good operator. Obviously, Hancock needs to understand exactly what it is that they have just bought. They need to look under the hood. The speed of that transaction. It was obviously very, very quick. So we will accommodate our joint venture partner for a period of time. We will look to make sure that if there are opportunities for regional synergies that can benefit Strike shareholders through a West Erregulla regional development with neighboring gas fields, that we prosecute those. However, we have been working on the development for many years. We don't have an infinite amount of patience, and we are committed to making sure that that field comes online in the near term.
So while we are accommodating of our partner and their new acquisition, we are committed to ensuring that West Erregulla comes to market because it is such a fundamental piece of value to Strike and its underlying equity. Then the last one is Ocean Hill, a really exciting opportunity that we have at Ocean Hill. For many, many years, the elusive 3D seismic could never be shot by the previous operators. It has had a fragmented series of landowners that were not necessarily aligned on the role that gas might have in the jurisdiction. Very pleasingly, through Strike's consistent and respectful and patient engagement with landholders and key stakeholders in the region, we were able to shoot that 3D earlier this year, 246 sq km of 3D seismic. Congratulations to everyone and the team that were a part of that.
We have really illuminated the Ocean Hill gas discovery, which was made in 1991. I can say that the pre-SDM volumes, the final volumes, the pre-stack depth migration volumes of that 3D seismic have arrived at Strike, and we are going through the mapping processes. The structure continues to improve. There's less compartmentalization than what we see there. We're really excited to bring Ocean Hill into appraisal next year. It's something that the board and I are having strategic conversations. What is the best way to do that? We can see an opportunity similar to what we delivered at Walyering post a successful appraisal well at Ocean Hill to bring that gas online inside of two years, so in around 21 months.
I'm confident that if we had, if we could do Walyering again, we would do it faster and cheaper than what we did at the time before. And that is the opportunity that is presented to us at Ocean Hill. We now have the seismic resolution in order to be able to be deliberate with our appraisal campaign as we were at Walyering, and it represents a huge lever of value of converting that independently certified 306 petajoule equivalent 2C to 2P. We know that the gas quality is excellent from the discovery well in 1991, so we know that the plant that we have designed at Walyering will be suitable for the plant at Ocean Hill.
It is only four kilometers from a compressor station into the Dampier to Bunbury Natural Gas Pipeline, and it does represent a really big activity that we intend to pursue with aggression and ambition sometime next year. Lastly, just to give you a little bit of an update on how the market is going, these are sadly four charts that I have to keep referring to because nothing is really changing. The world is going through a significant wave of underinvestment in oil and gas, and that is no different here in Western Australia. We have seen, and if you look at the chart in the top left-hand corner, it shows the rates of drilling, exploration, and development drilling in all basins in Western Australia that could potentially impact the Western Australian energy landscape.
As you can see, the rates of reserve replacement, let alone new discoveries, have capitulated to a handful of wells every year, most of those in the Perth Basin. What that's creating is a lack of new supply coming on and an anxiety of our industrial gas market of pending rising prices through a lack of supply. So you're seeing people at the Domestic Gas Alliance continually lobbying state government for domestic gas policy reform, which we have seen a lot of earlier this year. People are pulling on their cheap gas that they squirreled away when times were good. As you can see, since early 2021, we have been a net withdrawal of stored gas in Western Australia.
So the price of gas in the market, which you can see in the bottom left-hand chart, which has risen from sort of AUD 2 to AUD 3, AUD 4 up to AUD 8 to AUD 9, is here to stay, but probably doesn't reflect actually the true short-term value of gas because people are pulling on that stored gas in lieu of coming into the market and driving up prices any further. Now, the bottom right-hand chart shows you some independent modeling on where our electricity is going to come from. You can see a rising and increasing role for natural gas in our electricity system. We are using more gas today in our electricity system than we have ever done before.
And that is only going to rise as we start to see that big coal wedge, 42% of our electricity start to unwind, and we move to more renewables backed up by batteries and firmed by natural gas. Batteries still are short life. They are still expensive to deploy, and renewables are inherently intermittent. We believe in a low-carbon future, and that's why we intend to continue to deploy our gas into the electricity markets. And we see today's FID at South Erregulla is only the beginning of an increasing participation in Western Australia's energy transition and electricity network. It would be remiss of me not to point to this slide, which we put out to the market quite recently.
But as I spoke about just before, the Hancock Energy acquisition of the Mineral Resources assets has concluded, as John said, AUD 4 billion of mergers and acquisitions that have occurred in the basin since over the last five to six years. The price that people are willing to pay for undeveloped in-ground reserves has increased. The price that people are willing to pay for in-ground underappraised resources has increased. And so that is really an interesting metric that's come out of the Hancock Energy transaction, is that they are now buying resources at the same price that they're buying reserves at AUD 2 a gigajoule in-ground.
When we start to reflect on our reserve and resource position, and I showed you our 2P through 2U of 811 petajoules of independently certified resources and reserves, that indicates that Strike is trading at greater than a 50% discount to what these transaction multiples are reflecting of the underlying value of our gas that we have discovered and that we have online. It doesn't pay any respect to that a portion of our reserves are producing today, that a portion of our reserves at South Erregulla have been FID'd today as well. If we just take the West Erregulla acquisition, the non-operated stake by Hancock to Warrego, they paid about AUD 460 million in early 2023. Since that time, we have de-risked the assets through environmental approvals, through receiving our production licenses. We've made major discoveries nearby.
We have seen the domestic gas policy unlock a portion of LNG exports for the company, and we've seen sustained increases in West Australian domestic gas pricing so you can be comfortable that our share of West Erregulla is worth at least AUD 460 million, if not significantly more, based on those events that we've been able to create over the last year and a half or so. Strike's equity continues to trade at a significant discount to fair value. It is a strategic issue that is raised in our boardroom consistently, and it is something that the board of directors and I will continue to address of how do we return value, particularly given that we have discovered more gas post the downgrades that occurred at South Erregulla this year.
So we're on a trajectory back towards where we were previously, in my opinion, in terms of a value basis. That's all I had time to say today. Really appreciate everyone coming. I'll hang around for as long as required to answer every question that anyone has. And thank you again for another year of support.
Thank you, Stuart. I now move to the formal part of today's meeting. As a reminder, voting instructions are now on the screen or will be in a second. There they are. The minutes of last year's AGM held on the 23rd of November 2023 were approved by the board and signed by me as chair of the meeting in accordance with the Corporations Act. The minutes are available for inspection upon request. Voting can be conducted via the Lumi application if you've not voted already.
If you wish to change your existing votes using the application, it will override any votes currently cast. Voting will remain open for all resolutions until a time either clear voting has closed. Online attendees can submit questions at any time. To ask a question, select the messaging tab at the top of the Lumi platform. At the top of that tab, there's a section for you to type your question. Once you've finished typing, please hit the arrow symbol to send. I invite you to start submitting your votes and questions via the Lumi app. You can vote on the resolutions at any point during the meeting, and you do not need to wait until a relevant item of business. Votes can be changed up until either clear voting closed.
Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we'll answer them in due course via email or posting responses on our website. Valid proxies have been collated by the company share registry provider, Boardroom Pty Limited, and 562 proxies received from shareholders totaling 814,353,262 shares are tabled before this meeting. Where a proxy vote has been given to the chair without voting instructions and subject to voting exclusions, I intend as chair to vote in favor of those resolutions.
Proxy voting by resolution will be displayed on the screen once I have taken the resolutions as being read. As Chair, I direct that the vote on all resolutions is to be taken by way of a poll. To ensure there is sufficient time for all votes to be cast, the polls will close five minutes after the conclusion of today's meeting. Notice of General Meeting. The notice of annual general meeting and explanatory memorandum has been circulated to all shareholders via mail or electronically. With the permission of shareholders, I will take the notice of annual general meeting as read. Justin, have you received any objections? No objections. As per the notice of meeting, all proposed resolutions at the meeting will be conducted via poll via the Lumi application. The results will be tallied along with proxy votes and subsequently released to the ASX.
All resolutions at this meeting are ordinary resolutions. Accordingly, each resolution will be passed if at least 50% of votes cast by or on behalf of shareholders entitled to vote on each resolution are in favor of that resolution. Financial report. The financial report of the company and its controlled entities for the year ended 30 June 2024, together with their director's report and auditor's report, is required under the Corporations Act 2001 to be laid out before the AGM and made available on the company's website. I understand there have been no objections received from shareholders in relation to these reports. All resolutions now appear on the screen. I will pause for a moment to allow people to read the resolutions before we move on to display the proxy votes received for each resolution.
As noted in the notice of, sorry, as noted in the notice of annual general meeting, and in accordance with Section 250R of the Corporations Act, the vote on resolution one will be advisory only and will not bind the directors of the company. Unless there are any objections, I will take the resolutions as being read. The proxy votes received for each resolution are displayed on the screen. While we allow time for people to vote on each resolution, I will now take any questions in relation to the resolutions. There's time for more questions, Susan. Well, that concludes our discussion on the items of business. Please ensure that you've cast your vote on all resolutions. We'll now allow time for you to finalize those votes, and the polls will remain open for another five minutes before closing.
I would now like to open the floor to any questions from the audience that may or may not relate to those resolutions. We have some questions online.
Yep. We've got some questions from online. Stuart, you mentioned the company is 50% or more undervalued based on reserves, yet the share price does not move despite all the positive announcements. What does the board understand about who is doing this and why?
Yeah, thanks, Justin. I think it's fair to say that the company's gone through a trust issue with equity markets in February of this year with the disappointing results that we had at South Erregulla two and three. That obviously saw a significant reduction in our institutional shareholders, and the resultant reduction in market capitalization has pushed us into an awkward window where we need to sort of continue to grow our way back out of.
I don't think there's any specific who is doing what to our share price. I think what is important is that Strike continues to deliver against its strategy. I continue to believe that that is the right way forward, as demonstrated today through our investment decision at South Erregulla. Ultimately, the weight of impending cash flows will win the day, and I do believe that the stock will re-rate in time. However, what we have seen in the Perth Basin several times is significantly undervalued businesses where individual companies or people have chosen to bid those businesses, and you have seen value or share price appreciation ascribed very aggressively, very quickly. So there's multiple ways for the share price to rise to its true and more natural value.
That's either through the consistent execution of our strategy, which is what I intend to prosecute, or through third parties recognizing the undervalued nature of it. The next question is, have there been any M&A approaches by potential acquirers of Strike? We continue to observe our continuous disclosure obligations as per the Corporations Act and ASX listing rules. If there was anything that we needed to let the shareholders know about, we would do so duly.
And then the next one is, are there any discussions to progress the export of gas for 20% of reserves?
Yes. With the lifting of the export ban for the Perth Basin, we have opened those discussions with the various key parties that we would need to engage with in order to be able to export a portion of our volumes.
That is contingent on other projects going through their final investment decisions as well, and so it's something that we continue to work on, but we do see it as a valuable monetization route for a portion of our reserves. And then finally, when does the company expect to drill Ocean Hill, and do we have a rig booking? I think the answer to the last bit first is that what we are seeing is a reduction in activity in the Perth Basin as the Waitsia Joint Venture moves into its commissioning and production phase, and so we're seeing an expansion of rig time across both the rig that we've historically used, the Ensign 970, and the Ventia 106.
Add to that that there's a third rig that's entered the basin with the Mineral Resources Explorer, which they're using at the moment for the two contingent wells as part of their Hancock transaction. I think that we've got rig availability to drill Ocean Hill as and when we can see it. Like I said, we just received the last volumes of 3D seismic, so we're going through that process at the moment. I think that the board will review that subsurface information in the first part of next year and look for a suitable window subject to the balance sheet supporting that discretionary capital for an opportunity to drill it as soon as possible because we do see it as a significant lever of conversion of resources to reserves and underpinning a price-to-market third source of cash flow.
Thank you. Any other questions from the floor?
Are there any things that are just below the 5% threshold that you're aware of?
There are many. Let's say between 4.5%-4.9%, sorry. Yeah, it's not my duty to disclose shareholders that are below the self-disclosing thresholds. So I won't be drawn into breaching that sort of level of confidentiality obligation that we have, given that we have active view on the register. What I will say is that we have seen some votes against some of the resolutions today, which you might have seen in some of the percentages voted against. That shareholder particularly didn't engage with the company before making those votes, and we are intending to ensure that we create some alignment of what the board is trying to achieve and what that shareholder's objectives are. So it's something we will continue to do, and thanks for the query.
Yeah, sorry. When you reach out to MPV and the IRR, have you factored into the proposed substantial increase of the reserve capacity price from 230 per megawatt per year to 340, sorry, 354,000?
So we had independent third-party estimates for year three to year 21, and we've put an average out there into the market for that, I think at around AUD 250,000. We've used the actual capacity price for 2026/7 year, which is AUD 216,000 per megawatt hour, and then we've used the forecast draft capacity price of AUD 354,000 per megawatt hour for year two, and then going down to 258, as I just said.
Question here. Negative question for positivity, sorry. The Walyering project budget for AUD 16 million finished. Yep. And you do give me confidence, generally, and new people have learned, no doubt. But now we have AUD 137 million budget for South Erregulla down.
So are we going to share the 200 million? Great question, and it's something that the board obviously was very keen to interrogate. In fact, we established a new subcommittee in the board called the Major Project Subcommittee, and we established a completely new pre-FID planning and development arm inside of Strike. So what I would say is that while we were sort of rushed across its final investment decision, there was probably a degree of designing, planning, and executing going on all at the same time as we were desperate to take the business out of its equity merry-go-round and into cash flow generation.
Now, that did cause an increase in costs and a slight delay in schedule, which we don't intend to replicate because we have spent a considerable amount of time planning, costing, getting quotes, understanding the capital program for the South Erregulla project, and then that will be handed over to the executors as opposed to the executors sort of doing it all contemporaneously. A more traditional project execution or delivery methodology. As I said, that subset of our board, we've got some world-class project executors on our board, have sort of chaperoned that pre-FID team through the last sort of six, seven months or so, through the planning and preparation to the FID today and supported the FID. So we do not intend to make the same mistakes of the past.
As you quite rightly put, the magnitude of making that same mistake at South Erregulla's peaking gas power station could be more dramatic than what we saw at Walyering. I think hopefully that gives you some comfort that that's a key risk that the board and management continue to manage.
You mentioned a loan transition with Macquarie Bank. Could you elaborate a little further on that and compare that with capital raising through shareholders?
Sure. I think the life of Strike from being listed in 2007 to where we are today, there's a lot of equity issuances. I don't think any shareholder is necessarily too excited to see any more equity be issued to support the development programs. We have invested a lot of equity into the ground throughout our portfolio, which is ultimately what gives us the borrowing capacity that we have demonstrated with Macquarie.
As I said, we just recently announced that increase of our development funding package to AUD 217 million. The terms were released in June of this year, so there's a 6% coupon plus BBS over top of BBSW. It sort of gives you around about 11% all-in costs. With the transition from pre-development to post-development and post-production, there is no attaching equity to these series of debt facilities that we've historically seen with some of the very early-stage Macquarie financing. And so we do believe that this is our path to the lowest cost of capital to deliver the impending cash flows from these assets.
Any other questions?
Just one thing I might add, if I might. Given what's been going on in New South Wales these last few days, I think it's worth recognizing the relationship that we have with the state government, and it's been evidenced by what we would say is pretty quick approval for this peaking power station at South Erregulla. There just isn't the demonization of fossil fuels here as there is in other parts of the country, whether it's federally or in New South Wales. And not even just talking about coal, but gas as well. So the government here recognizes the importance of gas as a very important transition fuel as we move to more renewables.
And I think we need to recognize that because it's an altogether different and much more benign environment, and they are trying to help us do what we can to deliver on the gas-to-power strategy as part of our transition. It's just pleasing to reflect on that given what we've seen, the possibility of brownouts and blackouts in New South Wales, and then trying to blame other people for that when it's actually been government policy that's made it very difficult for the fossil fuel explorers and generators to actually deliver. So I just wanted to throw that in. That's the end of the formal business, and so I now declare the meeting closed. The results of the resolutions will be tallied and, along with the proxy vote, subsequently released, as I said earlier, to the ASX.
I thank you again on behalf of my colleagues on the board and in management for joining us again today, both in person and online, and we certainly invite you to join us with some refreshments outside. Thanks again, everybody.