Warrego Energy’s (ASX:WGO) H1 Marked with Strides at West Erregulla Field

Source: Kokhanchikov, Shutterstock

Summary

  • Warrego Energy has established itself as an emerging gas player by securing a long-term gas sales agreement for the West Erregulla Field.
  • The Company is undertaking an appraisal drilling campaign on the field including three wells.
  • The Spanish government has given approval for the transfer of the licences of the integrated gas production and power plant project, El Romeral.

Oil & gas explorer Warrego Energy Limited (ASX:WGO) has released its interim report card for the six-month period ended 31 December 2020. The principal activity of the Company involved exploration and development of oil & gas resources during the reported period.

Warrego operates the West Erregulla field in an equal joint venture (JV) with Strike Energy (ASX:STX). West Erregulla is a natural gas field located onshore Perth Basin in Western Australia under the exploration licence EP469.

Last year, Warrego executed a binding gas sales agreement (GSA) for a long-term gas supply of 155 PJ to Alcoa of Australia Ltd. The GSA is scheduled to commence from 01 January 2024. Owing to the size of the agreement, no additional supply contract or agreement is required to support the final investment decision (FID) by the Warrengo Board. The GSA was signed in September 2020, and its success is subject to the positive FID by the Board.

Data Source: ASX update, 10 March 2021  

 West Erregulla Field Development

The JV partners have planned a three appraisal well drilling program for improved understanding of the reservoirs and optimised field performance planning. The West Erregulla -3 (WE-3) well was abandoned due to higher well pressure than the planned well design. The drilling crew also lose the bottom hole assembly that could not be recovered in fishing operations.

Side-tracking also did not go according to the drill plan, and subsequently, some snags developed with the equipment. After so many delays, the JV partners decided to abandon the well for the time being and return after drilling the third well successfully.

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Must Read: Why Strike Energy (ASX:STX) Suspended West Erregulla 3 Well

Warrego and Strike signed a Heads of Agreement (HoA) to align themselves to the planned field development objectives. The agreed field development objectives include setting up a gas processing facility and supplying 80 TJ/d of natural gas to the Dampier to Bunbury Natural Gas Pipeline (DBNGP).

The JV partners have selected the Australian Gas Infrastructure Group (AGIG) to build, operate and own the proposed gas processing facility. AGIG is currently engaged in the FEED study for the project and is expected to complete the study by Q1 of 2021.

The JV partners have planned to apply for the conversion of EP469 into a production licence once the FID is complete.

Also Read: Warrego Energy (ASX:WGO) Reports Busy December Quarter with West Erregulla Project Developments

Projects in Spain

Warrego Energy has received the Spanish government approval for the transfer of licences for the El Romeral project. The integrated gas production and gas power plant project is located in the onshore Guadalquivir Basin in the Seville province of Spain.

Warrego controls a 50.1% interest in the project.

In another project in Spain, Tesorillo Project, Warrego holds an 85% interest. The Company has applied for drilling approvals and permits on the project.  

At the end of the period, Warrego had unrestricted cash of $33.4 million and no debt.

Stock Performance - In the last one year as of 10 March 2021, the stock of Warrego has delivered a handsome return of 103%. The stock was trading at $0.225 on 11 March 2021 (AEDT 12:15 PM), up 2.272% from its last closing price. The Company has a market cap of $217.33 million.  

Also Read: Crude Oil at One Year High; Stocks on the Radar - BP Spon & Exxon Mobil Corp.

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