Strike Energy and Warrego Energy announce initial gas during West Erregulla-2 drilling

Joint venture partners Strike Energy (ASX: STX) and Warrego Energy (ASX: WGO) have announced initial gas to surface while drilling the highly-anticipated West Erregulla-2 well at the Warrego gas project in Western Australia’s North Perth Basin.

The drilling of West Erregulla has been closely watched as its gross prospective resource of 1.162 trillion cubic feet of gas makes it one of the largest pre-drilled conventional onshore prospects in Australia.

Operator Strike has had to overcome some drilling difficulties since it spudded the well close to two months ago. In an update last week, the company reported a slowdown in drilling through the Kockatea formation.

However, today Strike announced the top of the targeted Wagina formation was encountered at 4,102m and at 4,111m, a drilling break saw the rate of penetration increase to 35m/h as clean porous sandstone was recovered over the shakers.

According to Strike, “significant high-pressure gas began rising within the mud system with over 98% C1 recorded with no fluorescence”.

Hydrocarbon category C1 usually refers to methane and is typically the dominant component of natural gas mixes.

Strike said since this time, material gas has been coming to surface, flowing sufficiently to light the flare on the rig.

Before it can provide sufficient information on pressures, permeability, flow rates or porosity, Strike said it would first need to run wireline logs to formally evaluate the initial results.

The well is currently at a depth of 4,117m. Once Strike has drilled the second intermediate section to total depth of about 4,230m, it plans to run the wireline logs over the entire section.

The well will be drilled to a planned total depth of 5,200m and penetrate two additional reservoir targets – a conventional gas target in the basal Wagina sandstone, and the primary sand sequence in the Kingia High Cliff.

Strike’s farm-in deal

Strike farmed into 50% of the Warrego gas project in June 2018, paying $600,000 to Warrego and becoming the operator, as well as agreeing to fund the first $11,000 of the West Erregulla-2 well costs.

The company struck a rig-sharing deal with another Perth Basin operator in January, hoping this would lock in an early May spud date.

However, the well was not spudded until early June, following a finalised merger between Warrego and Petrel Energy.

Warrego merger

Warrego used to be a private UK company before it merged with Petrel Energy via a reverse takeover in March.

Under the deal, Petrel acquired all of Warrego’s shares in exchange for about 77% of the issued share capital of Petrel.

It then changed its name to Warrego Energy and ASX ticker code from PRL to WGO and welcomed a new board of directors.

By midday trade, Warrego shares were up 23.16% to $0.117 on the news, while Strike shares also climbed 17.19% to $0.075.