StrikeEnergy Limited (STX) - Strike now! West Erregulla spuds in...

StrikeEnergy Limited (STX) - Strike now! West Erregulla spuds in May StrikeEnergy (STX) is an emerging oil and gas company with a focus on onshoreexploration within two of Australia’s premier basins. This providesdiversification benefits to the Australian east and west coast domestic gasmarket with a focus on conventional and unconventional opportunities. Strikehas recently completed its workover of Jaws-1 well, located at the southern endof the Cooper Basin (PEL96, STX 66.7%), and in May 2019 will drill one ofAustralia’s most exciting prospects West Erregulla (EP469, STX 50%), a Waitsia(AWE) look alike which has a potential 69% chance of success in the PerthBasin. The West Erregulla-2 well, will be spudded in early May 2019 and istargeted to penetrate three play sequences including the Kingia-High Cliffsandstones, the Dongara-Wagina sandstones and the Irwin River Coal Measures. Weinitiate coverage with a BUY and target price of A$0.18/sh (0.7x P/NPV10).

WestErregulla (EP469, 50%) a Waitsia look alike· We see West Erregulla as a potential tier one asset in themaking. STX’s prospect evaluation from reprocessed 3D seismic data within theyet to be tested Kingia-High Cliff sequence (Waitsia), has yielded an extremelyattractive, top tier, conventional structure in a combined dip and faultclosure, resulting in a Probability of geological success (Pg) of 69%.· The presence of material hydrocarbons, indicated by structurallyconformable amplitudes and associated flat-spots identified within theKingia-High Cliff formations, provides a high level of confidence towardsmaking a commercial discovery.· Initial views of the prospect are that it would be more thansufficient to support a stand-alone development with a best estimate P50Prospective Resource of 916 Bcf.· Strike acquired a 50% interest and operatorship of EP469 inMarch 2018 from Warrego Energy and will fund Warrego’s share of one explorationwell to a total amount of A$11m, inclusive of associated costs.

SouthCooper Basin (35-100%) – Jaws update (PEL96)· STX has completed the clean out and workover of the Jaws projectwells with the focus now turning onto the depressurisation of the Vu upper coalseam with the aim of reinitiating gas flows.· PEL96 (STX 66.7%) currently holds a 2C contingent Resource of104Bcf of gas and requires a minimum 2P Reserves of 150Bcf to commericalise theopportunity.Key Dates Ahead· Commercial success of Jaws 2019.· High-impact drilling of West Erregulla Q2 2019.We initiate coverage with a BUY and a PT of $0.18/sh using arisked NPV10 of 0.7x P/NPV10