The Motley Fool

Why the Strike Energy and Warrego share prices are rocking on their West Eregulla project

Shareholders in either Strike Energy Ltd (ASX: STX) or Warrego Energy Ltd (ASX: WGO) will be thanking their lucky stars this month after a joint venture operated by the two resources explorers announced a “staggering” WA conventional gas discovery at the West Erregulla project.

The Strike Energy share price has soared 86% from 14 cents to 26 cents since the announcement, while the Warrego share price is up 66% from 18.5 cents to 30.5 cents.

The two companies hold a 50% interest each in the West Eregulla project and this afternoon upgraded their estimates of the recoverable gas at the Kingia field as part of the West Eregulla project to a net pay of 58 metres at a “very high reservoir pressure recorded at 6,814-6,828 psia”. 

Investors will need a deep expertise on geology and gas exploration to get a grip on what this kind of discovery and reported numbers might be worth commercially. 

This afternoon Strike’s managing director, Stuart Nicholls said: “The Kingia gas discovery exhibits characteristics of one of the highest quality gas finds onshore Australia. With 58 metres of net pay, this makes West Erregulla 2 the thickest net column seen in any Kingia penetration within the basin to date which is host to the historic Waitsia gas field.

The high reservoir pressures and excellent permeabilities are supportive of a significant recoverable gas resource with gas compositions in-line with the neighbouring Waitsia field.”

Strike now has a market cap around $389 million, with Warrego at around $200 million.

Neither company has any revenue or sales for now though and it’s likely to be costly to commercialise the gas fields so today’s investors must be confident in their research before taking the plunge.

NEW. Five Cheap Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!