Up-and-comer ready to strike

AN encouraging year, rising stock prices and a higher profile have pushed Strike Energy to rapidly climb the unconventional oil and gas ladder.
After an unimpressive 2011 — during which Strike lost 38 per cent of its value — the company has seen a 120 per cent improvement, with investors buying into its grand Cooper Basin plans. “The last 12 months have been transformative for Strike,” managing director David Wrench said. “Our company now has two large and exciting assets in two of the world’s best unconventional oil and gas plays: more than 4 million net acres in the Cooper Basin, South Australia, and 10,000 net acres in the Eagle Ford Shale, Texas.
During the year, we made substantial progress in advancing both of these projects.”
Despite having operated in the Cooper Basin for nearly decade, the rapidly expanding oil and gas company saw little interest from investors until the announcement of its joint venture with Beach Energy last year.
Strike’s Cooper Basin assets are not the only ones to gain attention though, with the company’s US interests also starting to share the spotlight.
Strike in Australia
According to Strike’s website, “since the 1970s, the Cooper Basin has supplied more than 5 trillion cubic feet of gas to Australia’s eastern and southern gas markets”, making it a highly valuable area for unconventional oil and gas explorers.
“Driven by the LNG export industry, Australian east coast gas demand and prices are expected to increase considerably in coming years, and the Cooper Basin is best placed to meet this demand,” Mr Wrench said.
“It is a proven hydrocarbon-producing basin and is already connected to east coast markets via existing pipelines. We estimate that Strike has a 14tcf net prospective resource within our Cooper Basin permits.”
Strike is involved in six permits within the Basin: sharing an interest in two Beach-operated permits, PEL 94 and PEL 95; and acting as operator for PEL 96, PELA 71, PELA 515 and PELA 575.
In April, Strike and Beach drilled the Marsden 1 well in PEL 95 which, according to a statement by Strike, revealed “coal and shale thicknesses that match or better pre-drill expectations and exceed the values used in Strike’s resource model”.
Marsden 1 was drilled in the Battunga Trough and encountered more than 800m of Permian sediments, including the targeted formations Toolachee; Roseneath, Epsilon and Murtaree (REM); and Patchawarra.
The Davenport 1 unconventional evaluation well was drilled in May this year, and the JV discovered a 45m-thick coal seam in the Patchawarra Formation, well above previous thickness expectations, and more than 110m of net coal through Toolachee, REM and Patchawarra.
Mr Wrench said the results built “upon the positive results from Beach and Strike’s Marsden 1 well in PEL 95, and confirm that the Southern Cooper Basin hosts a very significant hydrocarbon resource”. Strike has since upgraded its Cooper Basin resource estimate by 136 per cent to 14.3tcf of gas and 54 million barrels of liquids within its 4 million acres of permits.
“Strike acquired its interests in the permits a couple of years ago, after identifying the area as having the shallowest Permian Age coal and shale formations in the Cooper Basin,” Mr Wrench said.
“The drilling that we’ve undertaken together with Beach has also given us increased confidence in the adjacent PEL96, which is operated by Strike.” In addition to holding the rights to a 578 million tonne lignite resource near Kingston in South Australia, the company has significant exploration interests offshore the Carnarvon Basin, WA. Strike’s permits in the latter include: the undeveloped 16 billion cubic feet Rivoli gas field; the Baniyas gas/condensate project, with an estimated prospective resource of between 4mmbbls and 8mmbbls; and the WA 460P permit, which covers 20 per cent of the 13.5tcf Palta prospect. Strike in the US
With 10,000 net acres and a 27.5 per cent working interest in the 37,000 gross acre Eagle Landing JV between Strike and four Texas-based companies, Strike is part of a growing list of companies interested in the Eagle Ford Shale.
The Eagle Ford Shale was described on Strike Energy’s website as the US’s “most exciting hydrocarbon play”.
According to the company, the Eagle Ford Shale contains a high shale liquid content where operators can earn about 90 per cent of their revenues. Fracture stimulation of Strike’s first production test well, Bigham 1H, which plays an important role in the company’s future at the Eagle Ford Shale, has been completed.
“There have been a number of milestones this year, including the Marsden and Davenport unconventional evaluation wells in the Cooper Basin. However, the biggest milestone – so far – is the drilling of our first Eagle Ford Shale production test well,” Mr Wrench said.
“The Bigham 1H well is expected to commence production soon and the well’s production performance will be critical in demonstrating the potential of our Eagle Ford acreage.”
Mr Wrench said that as a result of the Bigham 1H test well, Strike’s Eagle Ford Shale project was generating interest. “Over the last year, Strike’s Cooper Basin assets have generated considerable interest due to our large permit area – one of the biggest – and our successful unconventional drilling program,” he said.
“However, as first production from Bigham 1H, our first Eagle Ford Shale well, approaches, we’re seeing a lot of people sit up and take notice of the potential value of this asset.”
Strike also holds a 25 per cent working interest in the Permian Basin JV, about 48 kilometres miles north of Midland, Texas, operated by Torch Energy Advisors, and owns 1875 acres of the 7500 gross acres in the permit area.
According to Strike, there are 500mmbbls (net) of original oil in place. The company’s first Permian Basin oil infill well at the Lower Clearfork Shale Formation, completed in August this year, encountered 98m of gross shale.
Looking to Strike
After a heartening year, Strike has its sights firmly set on future growth through its Cooper Basin and Eagle Ford Shale ventures.
“We’ll be pushing both of our key projects forward,” Mr Wrench said.
“Back-to-back drilling of production wells in the Eagle Ford Shale is expected, and we plan to return to the Cooper Basin: flow testing Marsden and/or Davenport, and drilling further evaluation wells in Strike-operated PEL 96 to demonstrate the lateral extent of our coal and shale resources.”
Mr Wrench said he believed the company had “huge leverage” in the unconventional oil and gas sector in “very good locations”.
“We are only just starting to demonstrate the quality and value of our Cooper Basin and Eagle Ford Shale assets, so substantial upside remains,” he said.
Mr Wrench said the company had expanded since it was established in 1997, and had the ability to push further into the oil and gas stratosphere.
“Today, we are developing high-impact unconventional assets, and we have the strategy, team, partners and financial flexibility to see them through to commercial development,” he said.
Despite the long road ahead, Mr Wrench said he was focussed on the end result.
“While we still have much work to do to prove the commerciality of Strike’s prospective resource, our next goal is to demonstrate that the coals within Strike’s permit areas are capable of flowing hydrocarbons to the surface,” he said.

Leave a Reply

Your email address will not be published.

* Copy This Password *

* Type Or Paste Password Here *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>