“The drilling program, scheduled to commence in October 2007 and planned over a 12-month period, includes six new primarily development wells targeting the gas pay zones penetrated in the Duncan-1 well on the Rayburn discovery,” Strike said yesterday.
“A few of the wells are expected to be combined development and exploration wells with offset exploration targets on the large Rayburn Prospect (up to 500 billion cubic feet) and other wells may include further exploration drilling from the Canyon (20Bcf), Rodeo (240Bcf) and Flint (40Bcf) prospects.”
Strike managing director Simon Ashton said the Rayburn prospect was a large structure with interpreted gas pay at multiple levels.
“The pay zone in the Middle Wilcox level is interpreted as excellent quality, clearly defined on seismic and of a scale potentially greater than our Mesquite Project interest,” Ashton said recently.
“The pays in the Lower Wilcox are not as high quality and not as well defined seismically but are still expected to flow at commercial rates and are associated with a very large structure.
“Adjacent wells in nearby fields producing from similar horizons have initial flow rates in excess of 10 million cubic feet per day.
“The potential will be evaluated with the flow testing of the well within the next few months and further development drilling as warranted.”
Revenues from a successful development drilling program are expected to increase Strike Oil’s income stream from $US8.6 million in 2006-2007 to more than $20US million in the 2008-2009 year, giving the company a positive cash flow.
The initial testing of Duncan-1 well is planned to start in early September.
Meanwhile, Strike is planning its drilling and development program, and is working on finalising key agreements for surface facilities, transport and gas sales, and installation of facilities.
“The development drilling of the shallower Wilcox pay interval in the Duncan-1 well is planned for October, 2007,” the company said.
“The rapid installation of production facilities will enable initial test gas and subsequent production to be sold immediately.”
Strike said it expected to fund its US$15 million share of the proposed drilling and development program from its existing cash flow from the Mesquite Project, new revenue from Rayburn development, a possible small debt facility and a $A10 million entitlement issue, details of which would be announced in the next week.
