I am bullish on the Perth Basin in general, clearly not the only one given the aggressive bidding for Warrego. Beach know the basin well and seem very keen having just increased their offer 25% within days of Hancock's offer. Interesting to see what comes next.

The Perth Basin, in particular the deep Kingia reservoir is a fantastic onshore find, some of the best rates onshore Australia ever. The succession of discoveries for Strike, MinRes and Beach/Mitsui is amazing, they have clearly cracked the code. The downside has always been the constrained market. Selling into a well supplied WA domestic market, with a 100% domestic reservation (for onshore gas) has always presented limited upside. Developments have to be delayed, staggered and constrained. However there's been a few catalysts in recent times that are changing that for Perth Basin players like Strike.

1. Reserve writedowns in offshore domestic fields. Woodside, BHP and Santos have all written down reserves in recent years effectively taking supply out of the domestic market.
2. Beach Waitsia export deal via NWS. The government showing they're willing to be pragmatic, bending the rules for onshore gas domestic reservation, to support activity in the Perth basin and keep trains full at the NWS. Great upside on price and therefore sales revenue. Strike seem to be suggesting Beach got special treatment due to the Stokes family ownership, probably did, lets see. If the Perth Basin really takes off there could be more similar deals. Also, if WA transitions to renewables at a rapid rate, the gas can be exported to Asian countries who can't transition as fast.
3. Coming into a strong mining cycle in WA and this has the potential to drive strong demand for gas, which the Perth Basin can deliver for low upfront capex. Evident by Hancock's interest in WGO (and surely if you're interested in WGO you're looking at STX too) and MIN's strong presence in the basin. MINs Lockyer Deep field looks excellent (I will write a note on the Norwest page too, they are 20% in Lockyer Deep).
4. Strike themselves have contracted Walyering at decent prices, I think they said $6-$7/GJ and I'd expect this to increase in the medium term.

Beach and Hancock can't both get Warrego and to me its logical whoever misses out would turn to Strike. Strike have a greater asset base than Warrego, but not the funding power of Beach, Hancock or MIN. The resource is more valuable in the hands of those who can get it to market fastest and lowest cost of capital. I also suspect the bigger companies would like to be partners with each other, so they're not dealing with a relative minnow such as Strike running their asset and having to deal with funding issues etc. Strike have done a great job on the exploration front, and are about to become a producer with Walyering but I still think the bigger guys will see themselves better placed to develop and produce.

I do agree with Credit Suisse that the basin is ripe for consolidation, those with deeper pockets and the ability to make a market (hancock mines, MinRes mines and Beach with potential export special treatment) are moving in and will devour the little guys in my opinion. The time is right given the points above.

I hold IRL.