Strike and partner Warrego Energy contracted Netherland Sewell and Associates Incorporated for a joint maiden reserves statement after lengthy disagreement on how much gas their shared acreage could hold.

 

Last year Strike suggested over trillion cubic feet based on tests at its first well West Erregulla-2 on a 2C basis. Warrego contracted RISC to provide an estimate, which came in at 512 billion cubic feet. 

 

When drilling at West Erregulla-4 hit water the two also offered differing views of the extent of potential gas-water contact which could have also driven down resource and reserve estimates. 

 

NSAI's 2P reserve estimate is 300 petajoules and 372PJs on a 3P basis. It suggests 128PJ on a 2C resource basis and 198PJ on a 2U resource basis. This gives Strike enough gas to progress the first phase of development, and the ability to secure project financing. 

 

‘We might not have met all expectations," managing director Stuart Nicholls said today during a conference call. 

 

The perched water polygon found  at West Erregulla-4, which Strike and Warrego have disagreed on, has knocked 180 petajoules off and lower-than-expected recovery from major target the High Cliff sandstone has taken another 160PJ. 

 

The blue sky plans for hydrogen, and fertilser as part of Project Haber will require more field work and significant success at its nearby South Erregulla field, which Strike wholly owns. 

 

Haber needs a 500PJ resource to underpin 20 years of production, though Nicholls said it would need "considerably less" than that to get to sanction and gas will "hopefully be delivered by South Erregulla". 

 

"We've always looked at South Erregulla as the backbone of the gas resource for Project Haber," he said. 

 

Nicholls said the estimate by NSAI was "somewhat conservative". 

 

"We're very pleased to be in the position we are today.... We do see a staircase build back to (some of the estimates of 2019)," he said, with the caveat that its entire former estimate would not be built back. 

 

It will reprocess old 2D seismic, conduct a new 3D campaign, drill West Erregulla-6 in 2023, deepen the troubled West Erregulla-3 and re-test West Erregulla-5. 

 

An improved recovery rate from the High Cliff sandstones of up to 75% could bring 30PJs back to the P50 estimate, he said 

 

"A downdip well could reduce the size of the perched water polygon," Nicholls said. 

 

"We have become very familiar with the data since 2019 through to today, NSAI have taken a conservative position as that is what their role is... we continue to carry an internal very optimistic view of the field but we've got more work to do to convince NSAI to include that in their assessment of the field."

 

Shares are down 14% to 24c each and Warrego shares 17% to 17cps.