In a market update this week, ASX-listed Strike Energy said it had signed a Memorandum of Understanding with oil and gas contractor Halliburton that gave the Houston-headquartered corporate giant first right of refusal to drill the first 50 wells of a campaign aiming to unlock up to 50 terrajoules a day from the Southern Cooper Basin.
The deal comes just six days before Strike will spud Jaws-1, one of the deepest pure coal seam wells ever drilled to a depth of 2000m that will then venture out 800m horizontally for a seven-stage hydraulic stimulation program.
A typical coal seam gas well is drilled to about 700m maximum, however Jaws-1 will test a resource that features gas sitting in a unique, saddle-type geological formation which shields the hydrocarbons from extreme pressures that would normally prevent coal seam gas from flowing at those depths . The thick reservoir also has an unusually thick pay zone of 30m, six times larger than most Queensland coal seam pay zones that usually tap out at around 5m in thickness.
Strike Energy said the MOU is dependent on Halliburton’s successful execution of the Jaws-1 well and the commercial success of its broader Klebb area tenements.
Management said the Jaws-1 appraisal well was running to schedule with the powerful Ensign 965 drill rig having already mobilised on site now on track to begin the operation on the 14th of February.
In a statement to the ASX this week Strike management said, “Both Halliburton and Strike are eager to gain significant learnings and build capability around the delivery of these technologically advanced horizontal deep coal wells in preparation for the planned Phase-1 50TJ/d project.”
Halliburton Regional Vice President of Asia Pacific Sid Whyte said, “We are pleased to agree to terms where both parties are looking at continuing our collaborative relationship, and Halliburton is confident we will execute successfully against our key performance criteria and deliver superior service quality for Strike.”
Strike Managing Director Stuart Nicholls added, “The incentivisation of Halliburton to deliver Jaws-1 to a quality that is synonymous with the Halliburton brand will further our strategic relationship to ensure the aspired cost reductions and improved well delivery times are achieved much earlier in the Phase-1 project development”.
Strike Energy is stirring interest in the oil and gas sector with one leading analyst last week potentially valuing the company’s flagship Southern Cooper Basin Gas Project as high as $1.6 billion - subject to the success of the Jaws-1 well.
This is around 20 times Strike’s current market cap of $80million. The company’s 66.67% share of the project gives it an extraordinary prospective gas resource of 11 trillion cubic feet.
By Matt Birney
