Strike Energy updates on Waitsia and West Erregulla

Strike Energy Limited (ASX:STX), established in 1997 and headquartered in Thebarton, Australia is engaged in the exploration and development of oil and gas resources in Australia. Its key focus, of late, is the Southern Cooper Basin Gas Project located in South Australia. In total, the company’s exploration permits, and applications cover over 9,232 km² within the Cooper/Eromanga basin.

On May 6^th, 2019, the company announced that the work demonstrating the analogous nature of Waitsia and West Erregulla has yielded further supporting geophysical evidence for a successful drilling result at West Erregulla.

Strike has consistently emphasised on the structurally conformable nature of the amplitudes in the Kingia-High Cliff sands at West Erregulla (WE) as evidence that they are both charged with gas and high quality /porous in nature. However, the comparison of the above attributes of WE to similarities in Waitsia has been a key question from potential investors.

Therefore, Strike recently remapped the reflectors in the equivalent Kingia-High Cliff sands on the vintage and poorly processed original Irwin and Beharra Springs 3D surveys over Waitsia, using reprocessed portions of the Waitsia seismic to improve the comparative geophysical signatures of the two fields. As anticipated, the reprocessing has demonstrated a high correlation as well as revealed sand depositional fairways’ high-resolution definition.

Strike is the operator and holds a 50% joint venture interest while the remaining lies with Warrego Energy.

The Managing Director, STX, Mr Stuart Nicholls, explained that the new evidence has put the company on an enthusiastic note with respect to the prospectivity of its upcoming drilling campaign. As a result of the recent conclusion regarding the analogous nature of the two features, Strike is quite confident about the successful result at the West Erregulla-2 well, due to spud in late May 2019.

Recently, the company released its quarterly report for the three months to March 31^st, 2019. Some of the key activities undertaken include - the site preparation for the Well was complete with regulatory approvals in place for West Erregulla-2 (WE-2). For the Jaws Appraisal Project in the Copper Basin, workover was completed, gas reduction was restored, and water production continued at 400-500 bbls per day. Besides, the company plans to farm-out at PEL515 to move ahead with the 3D-seismic operations in 2H CY2019 or 1H CY2020.

As for the corporate and commercial affairs, Strike is in advanced discussions on multiple commercial transactions to obtain the finance required to deliver on its Jaws and West Erregulla planned outcomes. Lately, it has also renegotiated and received the extension of the CBA R&D facility to June 30^th, 2019.

During the concerned period, the company recorded large cash outflows of around A$3.73 million from operating activities including payments for exploration and evaluation (A$3.42 million), staff costs (A$237k), and other corporate costs (A$238k). Meanwhile, the investing and financing activities led to net cash outflows of A$542k and A$8k respectively. The net cash balance amounted to ~ A$ 7.24 million.

Strike Energy has a market cap of ~ AUD 80.48 million. On May 6^th, 2019, the STX stock price settled the day’s trading at AUD 0.062, edging up by 3.33% from its previous day’s close.

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