- Oil and gas explorer Strike Energy (STX) has finalised its appraisal drilling program for the West Erregulla gas field
- The appraisal plan, work plan and budget for EP469 has also been ticked off by 50 per cent joint venture partner, Warrego Energy (WGO)
- Given the conditions around the COVID-19 pandemic and oil price crash, STX and WGO are seeking to get bang for their buck out of the drilling program
- The two new appraisal wells (WE3 & WE4) are to be constructed in such a way that they can be used as production wells when phase one goes ahead
- Strike is currently undertaking major procurement activities, including the drilling rig, to get things moving
- Strike Energy closed Monday’s session where it started the day at 12.5 cents per share
- Warrego Energy likewise traded flat at 12 cents a share.
Oil and gas explorer Strike Energy (STX) has finalised its appraisal drilling program for the West Erregulla gas field.
The appraisal plan, work plan and budget for EP469 have also been ticked off by 50 per cent joint venture partner, Warrego Energy (WGO).
Strike plan
Given the tricky global conditions around the COVID-19 pandemic and oil price crash, STX and WGO are seeking to get bang for their buck out of the drilling program.
The two new appraisal wells (WE3 & WE4) are to be constructed in such a way that they can be used as production wells when phase one goes ahead. A third contingent well (WE5) is also planned, but may not receive final approval until November.
A single drill rig will be mobilised to site soon to commence drilling in the September quarter. The same single rig will be used for all drilling to minimise costs across the appraisal project.
Strike is currently undertaking major procurement activities, including the drilling rig, to get things moving.
Outlook
Strike finished the March quarter with $24.3 million cash on hand and no debt. The company remains fully funded to its targeted phase one final investment decision at West Erregulla.
Warrego’s situation is a little more complicated. The company rejected an all scrip takeover bid from Strike in late March and the companies are yet to come to terms on a revised offer.
Warrego has some liquidity problems too, and will likely be relying on some success at Erregulla to secure more funding. Or maybe WGO is resigned to the STX takeover and is just playing hard-to-get. It’ll be interesting to see how this one plays out.
One other carrot dangling for investors is the news of two major LNG projects in WA suffering major delays – meaning there’ll be a tightening in the WA domestic gas market through the mid-to-late 2020s.
Erregulla looks to be a cheap and viable option to fill the prospective gap, meaning Strike and Warrego could stand to gain much – if they manage to secure the necessary funding and sort out their manoeuvring around the potential takeover.
Strike Energy closed Monday’s session where it started the day at 12.5 cents per share.
Warrego Energy likewise traded flat at 12 cents a share.