22 Nov 2016security holder rights change● Neutral
7,000,000 unlisted employee options at $0.20 expired on 18 November 2016. Administrative notice, reducing options outstanding.
Announcements, explained
Each one in plain English, with the numbers worked through for a shareholder.
22 Nov 2016material agreement▼ BadMajor
Strike gave notice that its discussion period with Orica over the gas supply agreement, due to expire 22 November, was extended to 20 February 2017. Certain rights that could lead to termination of the agreement stay suspended during that time.
17 Nov 2016capital raising announcement● Neutral
Letter telling shareholders with registered addresses outside Australia and New Zealand they are excluded from the rights issue. Administrative notice.
17 Nov 2016capital raising announcement● Neutral
Letter to eligible shareholders restating the rights issue terms, record date 21 November, and the 4% underwriting plus 2% management fees. Administrative; no new information.
15 Nov 2016debt financing● Neutral
Strike set up a new facility with Commonwealth Bank to borrow up to $3.6m against eligible R&D spending this year, to be repaid from the FY17 tax return. Earlier context expected up to $3.8m; this is the final size.
11 Nov 2016capital raising announcement● Neutral
Offer memorandum for the 1-for-14 rights issue at $0.07, up to about 64.3m new shares raising up to about $4.5m, fully underwritten; closes 5 December 2016. Repeats the terms announced earlier the same day.
What it means for a shareholder
64.3m new shares at about A$0.070 to raise about A$4.5m. That's 6.2% dilution: every existing holder's slice gets 6.2% smaller. If you held A$1,000 of shares (14,289 at the issue price), your slice goes from 0.00148% to 0.00139% of the company. To keep it you'd need 952 more shares - about A$67 at the issue price.
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11 Nov 2016capital raising announcement● NeutralMajor
Strike announced an underwritten 1-for-14 rights issue at $0.07 to raise up to about $4.5m, a 21.3% discount to the 10 November close. Taylor Collison underwrites. Funds go to Klebb flow testing, reserve certification, development planning and the planned PRL application.
11 Nov 2016capital raising announcement● Neutral
Letter telling option holders they must exercise options before the 21 November 2016 record date to join the $0.07 rights issue. Administrative; repeats known terms.
11 Nov 2016investor presentation● Neutral
Presentation supporting the $4.5m rights issue at $0.07, up to 64.3m new shares. Planned use: $3.2m for flow testing, $1.0m for development planning and partner engagement, $0.3m for costs. It targets first gas sales in 2018. Repeats the offer terms.
11 Nov 2016agm notice● Neutral
AGM address and presentation. Chairman Carnegie says progress at Southern Cooper has been slower than he expected but the path is clearly defined, and repeats the $4.5m rights issue and about 34% sub-underwriting. Largely repeats known facts.
4 Nov 2016quarterly activities report● Neutral
Addendum to the quarterly report listing permit interests, unchanged from before. It notes that on 1 October 2016 Eagle Landing JV participants agreed to sell the Bigham production asset, with the buyer getting 100% working interest but 75% of net revenue.
27 Oct 2016quarterly activities report● Neutral
September quarter cash was $4.4m, after the $6.3m R&D rebate and the $4.0m Macquarie repayment. The second Klebb pump was commissioned. Modelling suggests 1-4 months of steady dewatering before material gas flows resume. A Production Retention Licence application over about 200 km² is planned, and US divestments continue.
14 Sept 2016investor presentation● Neutral
Good Oil conference presentation by COO Chris Thompson, restating the east coast gas shortage, higher Adelaide gas prices and Southern Cooper scale. It shows 900.3m shares, cash $7.2m and a $94.5m market cap. Largely repeats known facts.
12 Sept 2016drilling progress report● Neutral
All four Klebb wells are operating, with jet-pump trials improving performance, but no commercial gas rates are yet reported. Klebb 2's second high-pressure pump was delayed by rain and road closures to early October. A 2 September storm damaged Klebb 3's generator.
9 Sept 2016material agreement● Neutral
New MD David Baker's employment contract: fixed pay $470,850 a year, bonus up to 100% of that, three months' notice. He gets 12 months' pay if his role is materially reduced, including through an asset sale. Standard terms.
9 Sept 2016security holder rights change● Neutral
Unlisted employee performance rights lapsed: 3,666,667, 3,666,667 and 3,666,666 at 20, 35 and 50 cent vesting prices, due to expire 30 October 2018. Administrative notice only, reducing the rights outstanding by 11m.
9 Sept 2016director officer appointment● NeutralMajor
Executive Director David Baker succeeds David Wrench as Managing Director, effective 9 September 2016. Wrench had led Strike as MD since 2011. Baker negotiated the gas offtake deals that mobilised about $17m and led the Eagle Ford sale.
7 Sept 2016admin correction● Neutral
Appendix 4G corporate governance checklist lodged with the annual report, pointing to the governance statement on the company website. Administrative filing with no new business information.
7 Sept 2016annual report● Neutral
The 2016 corporate governance statement says Strike complied with ASX recommendations unless otherwise noted. It reports one woman on the six-person board (17%) and none among four senior executives. Routine disclosure, no new business information.
7 Sept 2016annual report● Neutral
Strike released its annual report for the year to 30 June 2016. The chairman says progress at Southern Cooper has been slower than he expected, but the development path is clearly defined and focus is on building water production capacity to lift gas flows.
2 Sept 2016debt financing▲ Good
Strike received a $6.3m refund for FY2016 R&D activity. The $4.0m Macquarie facility was repaid in full and the remaining $2.3m added to cash. This resolves the extended Macquarie facility thread, as with last year's refund.
28 July 2016material agreement▲ Good
Adelaide Brighton announced it concluded negotiations on non-binding, indicative terms for gas from Strike from 2017, initially interruptible from the Demonstration Facility. It may become firm supply as production ramps up. It is not a binding contract and adds a customer beyond the 307.5 PJ of existing offtake.
28 July 2016quarterly activities report▲ Good
June quarter cash was $7.2m, including the $6.7m placement. The Klebb pilot upgrade and Klebb 4 pump commissioning were completed, and an indicative gas sale term sheet with Adelaide Brighton was agreed. Klebb 2 upgrade is planned for August; early shallow Epsilon coal results were encouraging.
15 July 2016drilling progress report● Neutral
Klebb 4's submersible pump was commissioned, so all four Klebb wells are now on test. Klebb 3 sustains 730-750 bwpd, but this means it will take longer to reach the conditions that produce rapid gas increases. Klebb 2 is still gas-handling constrained and is to be upgraded.
21 June 2016drilling progress report▲ Good
The Klebb 4 frac was pumped and the well is flowing back. Klebb 3 water production is about 550 bwpd versus about 450 before its workover, a 20-25% productivity gain. The same upgrade is planned for Klebb 2. No new gas rates given.
26 May 2016drilling progress report▲ Good
May testing tracked previous experience, with Klebb 3 water production now above 550 bwpd. Klebb 4 frac (500,000 lbs) and pump installation remain on track for June, with testing from early July. Four-well water capacity is expected to approach 2,000 bwpd.
18 May 2016security holder rights change● Neutral
Unlisted employee performance rights (566,667, 566,667 and 566,666 at 20, 35 and 50 cent vesting prices) expired on 14 May 2016. Administrative notice only.
2 May 2016drilling progress report▲ Good
Pump upgrades at Klebb 1, 2 and 3 were completed in April and all wells are back on test. Gas flows restarted after a four-week shut-in, with reservoir pressure back to about 2,300 psi. Klebb 4 frac and pump completion is due in June.
14 Apr 2016quarterly activities report● Neutral
March quarter cash was $4.4m, with the $6.7m placement received after quarter end. Record monthly gas volumes continued, pump upgrades at Klebb 1, 2 and 3 were nearly complete, and Klebb 4 completion is planned for late in the current quarter. Largely repeats the 31 March update.
7 Apr 2016capital raising announcement● NeutralMajor
Strike raised $6.7m through a placement of 67 million shares at $0.10, a 13% discount to the 1 April close. Directors take 1.7m shares, subject to shareholder approval. Funds go to accelerating production testing and pre-development at Southern Cooper.
What it means for a shareholder
67.0m new shares at A$0.100 to raise about A$6.7m. That's 7.4% dilution: every existing holder's slice gets 7.4% smaller. If you held A$1,000 of shares (10,000 at the issue price), your slice goes from 0.0012% to 0.00111% of the company. To keep it you'd need 804 more shares - about A$80 at the issue price.
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