Strike and Warrego Energy make major Kingia gas discovery at West Erregulla-2

Strike Warrego Energy ASX STX WGO Kingia gas discovery West Erregulla-2
Joint venture partners Strike Energy and Warrego Energy have announced a conventional gas discovery in the Kingia sandstone that appears to be of “higher reservoir quality” than the major Waitsia gas field.

Oil and gas duo Strike Energy (ASX: STX) and Warrego Energy (ASX: WGO) have made a major gas discovery in the Kingia sandstone during drilling of West Erregulla-2 onshore Western Australia.

The joint venture partners today announced the “staggering” find, reporting a gross gas column of at least 97m, including a 67m section comprising several high-quality large units of clean sand with thick blocky porosity development and high gas saturation.

This section is interpreted to have a net pay of 41m and an average porosity of 14.3% with peaks of up to 19%, according to Strike.

This latest find follows a significant discovery made in the well’s shallower reservoir target, the Wagina sandstone, announced by the duo at the start of August.

Two weeks ago, the partners upgraded the Wagina discovery after further analysis of log data indicated a net reservoir of at least 10.2m with porosities of up to 14%, from a total 79m gas column.

Potentially better than major Waitsia discovery

Strike managing director Stuart Nicholls described the Kingia intersection as an “exceptional” conventional gas discovery that “appears to have higher reservoir quality than the Waitsia gas field”.

The Waitsia gas field, located further north of the West Erregulla prospect, was discovered in 2014 and is considered the largest onshore conventional gas discovery in Australia in the last four decades.

Gas flowed from the AWE-operated Waitsia-4 well at 90 million cubic feet per day, which is one of the highest flow rates recorded from any onshore wells in Australia’s history.

“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,” Mr Nicholls said.

In a separate announcement, Warrego chief executive officer and managing director Dennis Donald said the 41m net pay is “significantly thicker” than analogues (comparison wells) in the Waitsia field and underlies the potential of West Erregulla to become “an important source of gas production in Western Australia”.

“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,” he said.

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

Next steps

The West Erregulla-2 well has a total planned depth of 5,200m, with drilling currently at a depth of 4,895m.

Drilling continue through the Bit Basher shale before intersecting the second primary target, the High Cliff sandstones.

According to Mr Nicholls, the High Cliff sandstones “show an even better anomaly” than Kingia, which he said meant the “chance of adding further material discovery looks promising”.

The well will then be drilled to its final depth at the top of the Holmwood shale, followed by wireline logging and coring before being completed for production and flow testing.

The West Erregulla permit EP469 is held in a 50:50 joint venture between the two companies with Strike as operator.

By afternoon trade, Strike shares were up 55.17% on the news to $0.225, while Warrego shares rose 54.05% to $0.285.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.