EWC approx 33% From Strike QuarterlySOUTHERN COOPER BASIN, SOUTH...

EWC approx 33% From Strike Quarterly
SOUTHERN COOPER BASIN, SOUTH AUSTRALIA
Strike is one of the largest permit holders in the Southern Cooper and Eromanga Basins with over 16,000km2 net to Strike (approximately four million acres) across six permits and permit applications. The Company is focussed on proving-up the commercial potential of its key permits – PEL 96 (Strike 67% and Operator), PEL 95 (Strike 50%) and PEL 94 (Strike 35%).
In the first half of 2012 Strike drilled two successful evaluation wells to analyse the coal and shale sequences within the Permian section. The Marsden 1 well in PEL 95 encountered thick coals and shales and the presence of heavy hydrocarbons up to pentane (C5), and the Davenport 1 well in PEL 94 encountered thick shales and over 110 metres of net coal – the thickest coals yet encountered in the Cooper Basin.
During the March quarter, Strike’s focus has been on the future appraisal program for the Southern Cooper Basin Project. Activities during the quarter included geological prognoses for potential well locations within PEL 96, review of preliminary well plans with South Australian regulatory authorities, the progression of well planning activities and conceptual development planning.
In response to the domestic market supply concerns, the Company has prioritised the establishment of an appraisal and development pathway for a material component of the resource initially focussing on, the Phase I Area in PEL 96 (Figure 3). The Phase I Area defined is a portion of the Weena trough where overlap and thickening of the Toolachee, Epsilon and Patchawarra are interpreted to exist within 10 km of the Moomba to Adelaide Pipeline System (MAPS). Approximately 400 to 800 Bcf (net Strike) of hydrocarbons is calculated to be recoverable from within the Phase I Area, which Strike plans to target with up to three wells in the second half of 2013. The area is analogous to the Milpera trough tested by Davenport 1. Geological and reservoir engineering studies conducted over the last two quarters highlighted key data to be acquired in the coming well program to ensure the maturation of the resource. As Strike’s plans have crystallised during the March quarter, we have advanced our discussions with potential vendors regarding long-lead items, drilling rigs and data acquisition.
Based on the information that has been acquired to date, various conceptual field development scenarios have been investigated and preliminary discussions held with engineering firms. The range of outcomes from these studies provides a compelling case for Strike to pursue the appraisal of the project targeting the Phase I Area. Given the relatively shallow drilling required to access the resource and proximity to the gas sales pipeline, capital expenditure is expected to be relatively modest by comparison to competing new sources of gas to the East Australian market.