Strike Energy Ltd. has signed an agreement with CSBP, a subsidiary of Wesfarmers, to convert its gas supply option to a fixed gas supply agreement at a rate of 25 terajoules per day over an 11-year period. Taketake agreements are often used in the development of natural resources, where the cost of capital for resource extraction is high and the company wants a guarantee that part of its product will be sold. The agreement with CSBP will allow Strike to deliver its entire volume on the first day after the completion of commissioning. Taketake agreements are generally used to help the sales company acquire financing for future construction, expansion or new equipment projects by promising future revenues and demonstrating existing demand for goods. The offtake agreements also contain standard clauses that include recourse – including penalties – each party has in case of violation of one or more clauses. Taketake agreements can also provide an advantage to buyers and function as a way to secure goods at a specified price. This means that prices are set for the buyer before the start of manufacturing. This can be used as a hedge against future price changes, especially when a product becomes popular or a resource becomes scarcer, so demand trumps supply. It also guarantees that the requested assets will be delivered: the execution of the order is considered an obligation of the seller in accordance with the terms of the taketake contract. The initial option model has been modified to a fixed price with an annual escalation.
The agreement simplifies agreements and supports both the provision of material-free cash flow from West Erregulla`s Phase 1 production and Strike`s performance expectations, according to the company, which now has a strong platform to ensure a quality financing solution for the construction program. The acquisition agreement is subject to a final investment decision for the West Erregulla project, but gas deliveries are expected to begin in the first half of 2022. An acquisition agreement is an agreement between a manufacturer and a buyer to buy or sell parts of the manufacturer`s future products. A taketake contract is normally negotiated before the construction of a production site, such as. B a mine or a factory, to ensure a market for its future production. In addition to providing a guaranteed market and a source of supply for its product, an acquisition agreement allows the manufacturer/seller to guarantee a minimum result for its investment. Because taketake agreements often help secure funds for the creation or extension of a facility, the seller can negotiate a price that guarantees a minimum level of return on associated products and thus reduces the risk associated with the investment. Most of Abneh`s agreements contain force majeure clauses. These clauses allow the buyer or seller to terminate the contract if certain events occur outside the control of one of the parties and when one of the other parties imposes unnecessary difficulties.
Force majeure clauses often protect against the negative effects of certain natural acts, such as floods or forest fires.