The two gas explorers are up 20.6% and 12% respectively at time of writing. Continuing their upward share price momentum since an initial drilling discovery was announced last week.
Together the pair are working on a 50-50 joint venture in the West Erregulla-2 well. A project within a promising gas tenement in the heart of the Perth Basin.
What makes today’s discovery so significant though, is just how unexpected it was.
A lucky find for Warrengo and Strike
Warrengo and Strike had no idea just how much gas was lying beneath the ground. It was only revealed once drilling uncovered a ‘sudden influx of over-pressured gas’. A very happy accident indeed.
Better still, the Wagina sandstone within the well doesn’t intersect with their real target. Meaning this discovery is just the cherry on top of what drilling was expected to uncover. And there could be more of it to come, as further Wagina sandstone may still be lurking below.
Strike’s Managing Director, Stuart Nicholls was certainly pleased, stating:
‘This is a significant discovery and comes from a secondary target which carried a low pre-drill probability of success. Importantly, it provides further confidence in Strike’s predictions of good porosity development within Permian reservoirs being possible at depths greater than that of Waitsia and to the South-East.’
‘With good porosity trends continuing with depth, Strike believes that it is on track to find a good quality reservoir within its primary target in the Kingia-High Cliff (West Erregulla)’
‘With the primary target remaining to be drilled and potentially even more Wagina to come, this is a very exciting time for the company.’
It certainly is. And for shareholders, the prospect of exciting returns is even more dazzling.
What’s next for the hopeful duo?
For now, drilling has stopped at the current hole. Strike will need to reassess and prepare for the second intermediate section.
Following that, they will then start drilling on the final hole. No doubt hoping for another spectacular result.
Tonight though, both companies will be celebrating. They may be on the cusp of a massive gas discovery. Time will tell.
If this does come to pass, it should be noted that Strike does have an offtake agreement already in place. Wesfarmers subsidiary, CSBP has acquired the rights to up to 100 petajoules of gas. A major deal that all stakeholders will certainly want to see fulfilled.
Until then, it’s back to preparation and drilling for these two stocks.
For Money Morning
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