Strike Energy (ASX: STX) has achieved its final technical milestone at its Southern Cooper Basin coal seam gas project after spudding its Jaws-1 appraisal well.
With a 66.67% operator stake in the project, Strike Energy reported the Jaws-1 drilling program was due to wind up in April.
First gas flow to surface from Jaws-1 is scheduled for the September quarter this year – up to five months after dewatering begins.
“The spud at Jaws-1 well is the culmination in what has been a major turnaround for Strike,” Strike managing director Stuart Nicholls said of the company’s achievement.
“The new team at Strike have completed almost a full year of work in preparation for this milestone, which has seen the company redefine its geological, technical, commercial and economic foundations,” Mr Nicholls said.
He added the well may significantly contribute to Australia’s east coast gas needs.
The company has the gas sales agreements covering about 122 petajoules of gas. Once commercial delivery has been achieved from the project, Strike plans to pipe around 50 terajoule per day of gas to Moomba for processing then piped into the eastern states’ market.
According to Strachan Corporate, which published an analyst report on Strike Energy last month, the market may pay up to A$10 per gigajoule.
Adelaide-Based Strike owns exploration permits and exploration applications across 9,232 square kilometres in the Cooper Basin, which the company claims is Australia’s “most prolific” onshore oil and gas region.
The permits make up the company’s Southern Cooper Basin project.
Strachan valued Strike Energy at A$160 million or A$0.126 per share. The analyst estimates Strike Energy’s Southern Cooper Basin project has a target value of A$1.6 billion.
Strike Energy’s technical advantages for its Southern Cooper Basin project include 60m in coal thicknesses with 35m in one seam. This compares to much thinner seams in other commercially operating fields.
Once Jaws-1 is operational, Strike Energy will begin developing Jaws-2.
Shares in Strike Energy remaining unchanged in early morning trade resting at A$0.071.