ASX listed Strike Energy is now soundly positioned to drill the promising West Erregulla-2 well in the Perth Basin, WA, after filling its war chest with a successful $13m share placement.
The funds were raised through a placement of just over 113m shares to international and local institutional investors at a price of 11.5 cents per share, which represented a 19.8% discount to the 5-day volume weighted average price of Strike’s shares.
Strike has also launched a share purchase plan that allows existing shareholders to acquire additional shares at the same discounted price to raise up to $5m.
Proceeds will support drilling of West Erregulla-2 and complete pilot production activities for the Jaws-1 deep coal seam gas wells in the Cooper Basin.
In the event of a successful takeover of UIL Energy, the funds will also be used to meet UIL’s existing permit work commitments in the Perth Basin.
West Erregulla is believed to be an onshore Kingia-High Cliff conventional gas target similar to the adjacent Waitsia gas field that is operated by Australian petroleum major Beach Energy.
It has multiple direct hydrocarbon indicators, estimated gross prospective resources of 884 billion cubic feet of gas and like Waitsia, is right next to existing gas transport infrastructure including the two major gas transmission pipelines of WA.
Strike said gas demand in WA is expected to rise from 2020 as existing supply from the North West Shelf declines, whilst major industrial gas users have flagged market growth.
The gas volumes and rising demand are expected to be sufficient for West Erregulla to be considered for a standalone development.
Additionally, the potential for Waitsia and West Erregulla to nearly triple the discovered reserves of the Perth Basin is a clear signal that this petroleum basin is underexplored.
With the successful capital raising fulfilling one of the conditions of Strike’s recommended takeover of UIL Energy, the company is also on track to substantially increase its Perth Basin acreage to over 3000 square kilometres.
This will give Strike additional exploration opportunities including potential extensions of the Kingia-High Cliff sands in UIL’s three northern permits.
The extra land holdings will also give the company the scale it needs to effectively negotiate contracts, deploy capital and hold discussions with the regulator.
Adding interest, Beach Energy is planning to shoot over 200 square kilometres of 3D seismic soon on the western side of one of UIL’s northern permits.
Further prospectivity could come from UIL’s southern permits, which host a series of conventional and unconventional oil and gas plays.
These include the Ocean Hill and Walyering discoveries that contain both gas and liquids.
Managing Director Stuart Nicholls said: “Strike Energy is now in a strong position to execute drilling of the West Erregulla-2 well in the Perth Basin in early 2019, targeting a material conventional gas reservoir similar in nature to the neighbouring Waitsia gas field.”
“Strike is also funded to see Jaws-1 through the production testing phase towards the declaration of commercial success at the Southern Cooper Basin Gas Project.”
