Strike Energy (ASX: STX) should trade firmer after entering into a gas supply option agreement for 30PJ of gas with Orora Limited (ASX: ORA), the recently demerged Australasian and Packaging Distribution division of Amcor Limited (ASX: AMC).
The gas is to be produced by Strike from its Southern Cooper Basin Gas Project, specifically within permit PEL 96.
The gas is to be delivered at 3PJ per annum, at a fixed price over a 10 year term from 2017, which is the expected commencement of production from the project.
Orora has agreed to pay an option fee to Strike, conditional only upon the PEL 96 joint venture proceeding with a pilot production test project.
Orora can then exercise the option when a decision is made by the PEL 96 joint venture to proceed with development of the project.
Strike will use the option fee to accelerate the PEL 96 work program following the recent confirmation of a substantial, continuous gas resource directly under the Moomba to Adelaide gas pipeline.
The Option Agreement complements the foundation contract with Orica (ASX: ORI) announced in July 2013 with the signing of a binding term sheet for the supply of up to 150PJ of gas over a 20 year period.
The Orora Gas Supply Option Agreement is another important milestone in the commercialisation of Strike's resources in the Southern Cooper Basin.
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