JV Partners Strike Energy and Warrego Energy Announce Major Gas Discovery

THE BOWSER: The Strike Energy (ASX: STX) and Warrego Energy (ASX: WGO) Joint Venture announced a timely gas discovery that should provide plenty of discussion at the upcoming RIU Good Oil Conference.

The Strike-Warrego Joint Venture announced it has made a, “significant gas discovery”.

The discover is in the Kingia sandstone and was discovered as part of the JV’s West Erregulla-2 drilling campaign.

Logging While Drilling tools confirmed the presence of a thick hydrocarbon bearing zone in the Kingia sandstone at the West Erregulla-2 well.

Elevated mud gas readings were observed whilst drilling.

The logs confirmed the well encountered a total Kingia sandstone of 117 metres with a gross column of 97m and a confirmed net pay of 41m using a 10 per cent cut-off.

The Kingia formation was encountered at 4,753m with gas on rock showing a gross gas column of at least 97m.

The lower section from 4,790m onwards is made up of several high-quality large units of clean sand with thick blocky porosity development.

This 67m section, which has high gas saturation throughout, is interpreted to have net pay of 41m and an average porosity of 14.3 per cent with peaks of up to 19 per cent.

Importantly, the well has not encountered a gas water contact in the Kingia formation which, along with the excellent reservoir quality, is consistent with the seismic amplitude model that supports the interpreted field boundaries.

Strike Energy is the operator and the holder of a 50 per cent interest and Warrego Energy the holder of the other 50 per cent.

Strike completed drilling through the Kingia sandstone encountering the Bit Basher shale.

At the time of announcement drilling had reached to depth of 4,895m where the well is yet to encounter the High Cliff sands.

Strike indicated it will continue drilling through to a nominal final depth of 5,200m at the top of the Holmwood Shale.

This will be followed by wireline logging, side wall coring, casing and running of a production completion followed by a flow test.

“This is truly an exceptional outcome,” Strike Energy managing director Stuart Nicholls said.

“The Kingia results at West Erregulla have exceeded Strike’s highest expectations and indicate a significant discovery that appears to have higher reservoir quality than the Waitsia gas field.

“With West Erregulla-2 now being one of the deepest wells ever drilled onshore Australia and finding such excellent quality sandstone reservoirs, the subsurface paradigms of the Perth Basin are shifting.

“Strike believes it has unveiled a new conventional gas fairway, with these initial results validating our geological model.

“With gas discoveries in the Wagina and now the Kingia sandstones the West Erregulla campaign is company-changing for Strike.

“With the well drilling ahead to the High Cliff sandstones which show an even better anomaly than the Kingia at West Erregulla, the chance of adding a further material discovery looks promising.”

Strike’s excitement was duplicated by that of its JV partner Warrgo Energy with its Group CEO & managing director Dennis Donald declaring the discovery had exceeded its pre-drill expectations for the Kingia and substantially upgraded the company’s view of the West Erregulla gas fields as a whole.

“Our interpretation of analogous Waitsia field data and the seismic amplitude model gave us confidence that West Erregulla-2 would yield results, even though the target formations are substantially deeper,” Donlad said.

“The net pay of 41 metres is significantly thicker than analogues in the Waitsia field and underlines the potential of West Erregulla and EP469 to become an important future source of gas production in Western Australia.

“Drilling will continue through the Bit Basher Shale before intersecting the second primary target, the High Cliff Sandstones.

“For Warrego Energy, the discovery of a substantial, high quality conventional reservoir in the Kingia at West Erregulla is the culmination of 12 years of research, planning, investment and exploration activity in the North Perth Basin.

“The scale is material and has the potential to convert the fields from exploration to production assets in short order.”

The WE-2 well spudded in early June and a conventional gas discovery in the Wagina Sandstone was announced to the ASX on 1 August 2019.

The well will be drilled to a nominal total depth of 5,200 m at the top of the Holmwood Shale, followed by wireline logging and coring before being completed for production and flow testing.

According to Warrego’s announcement further analysis and evaluation of well data and subsequent test results are required before an initial estimate of Resources can be prepared.

The company said the intent is to subsequently flow test the discovered fields in the West Erregulla well.