Strike also has finalised documentation increasing its working interest from 10% to 25% in the Eaglewood Participation Agreement that governs its Gulf Coast exploration venture with operator Cypress E&P Corporation. Numerous prospects, some on trend with the Mesquite Project, are at various stages of leasing for further drilling this year.

The testing program on the first two wells is progressing, with Shefcik-1 and Webernick-1 testing multiple zones at commercial rates, according to Strike. However, both wells still have further zones to test before combined flow rates can be released.

“Test gas and condensate oil continue to be sold with daily sales levels varying greatly due to production interruptions as different zones are progressively tested and produced,” the company said.

“Daily production rates of test gas have been between 2 and 7 million cubic feet per day depending upon the zone being tested.

“In the first two wells drilled to date, multiple commercial zones have been tested and potentially commercial zones have been recognised.

“The testing of these zones will continue in an optimal manner and sequence that takes into consideration the commercial, operational, technical, competitive and sales constraint issues. The optimal sequence has required testing to be switched from one well to another. Further zones remain to be tested in each of the first two wells drilled to date and this will continue for the next four to six weeks in addition to testing of Shefcik-3.”

Assuming the next well, Webernick-2, is also successful, testing results to date indicate that the combined gas flow rate from all four wells will meet or exceed the 20 million cubic feet per day production capacity that can be handled with the existing processing facilities, according to Strike.

Preparations are underway to assess options to expand this capacity when it is considered justified.

A second gas sales pipeline connection has now been completed, increasing the sales capacity to around 12-13 million cubic feet of gas per day.

A third sales pipeline, expected to be connected by mid-April, will increase the sales flexibility and raise the sales capacity to 30 million cubic feet per day, but it should not be assumed that this is necessarily equivalent to the level of production expected at this time, Strike said.

The Webernick-2 well is expected to spud within one to two weeks. Drilling, completion and potential testing of this well are expected to take 60 to 80 days.