Production facilities have arrived and are being installed at Shefcik-1, on the Mesquite B Prospect, in preparation for production testing.

Strike said it plans to test three separate gas pay intervals interpreted from the drilling information and logs in the Shefcik-1 well. Each interval is planned for stimulation by fraccing the formation, to enhance production rates and gas recoveries, the company said.

These operations are due to start on January 15 and could take up to four weeks to complete, Strike said.

A gas sales contract is also being finalised to initiate immediate gas sales once a pipeline connection is made.

Meanwhile, the Webernick-1 well, at the Mesquite A Prospect, is at a depth of 3187 metres. Current operations involve setting a 7 5/8 inch liner before drilling ahead to intersect the target intervals.

Upon completion, the rig is programmed to drill the Shefcik-2 well, 366m north of Shefcik-1.

Strike Oil has a 26.25% working interest (net revenue interests of between 20% to 21% after royalties) in both the Mesquite A and B Prospects.

The Mesquite A and B Prospects have 15-20 and 10-15 billion cubic feet of recoverable gas potential respectively, with individual well potentials of 3-5 billion cubic feet each, according to Strike.

Based upon published information from recent wells drilled on the same structure in adjacent leases, gas flow test rates ranged from 5.4-16.9 million cubic feet per day.

Strike said a commercial discovery at either prospect would be profitable due to the nearby pipeline infrastructure.

In addition, production would involve low operating and development costs, as well as high gas prices - over US$8 per thousand cubic feet - currently being paid in in the region.