The Strike Energy Ltd (ASX: STX) share price has been a poor performer today. This follows the energy company's update on the West Erregulla Appraisal Campaign on behalf of its EP469 Joint Venture.
Strike Energy and Warrego Energy Ltd (ASX: WGO) both hold a 50% joint venture interest in EP469. The gas project is located about 230 kilometres north-east of Perth in the North Perth Basin in Western Australia.
At the time of writing, Strike Energy shares are selling for 35 cents a pop, down 7.8%.
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What did Strike Energy announce?
Investors are heading for the hills, dumping Strike Energy shares after digesting the company's latest release.
In a statement to the ASX, Strike Energy advised its WE5 drilling is continuing to perform to expectations. So far, a depth of approximately 3,356 metres measured depth (MD) has been drilled and is currently in the Woodada formation.
Strike Energy is aiming to drill the intermediate hole section down to a nominal depth of 3,750 metres MD. At that point, the company will have received wireline logs for WE5. Running of the casing and cementing in place is expected to follow afterwards.
In regards to WE4, the clean-up of the well has been paused due to sand being found in the production stream. Strike Energy noted that the source of the sand was identified as the Kingia Sandstone, but was unsure of what caused its presence.
The company said that while some reservoirs produce sand initially on test, the test surface equipment for WE4 is not suited to high-velocity sand. As a result, Strike Energy has put on order additional equipment to support the remaining clean-up and production test.
It is expected that the equipment will take an estimated 2 weeks to procure. In the meantime, the company will assess if it's viable to combine the flow testing of WE4 and WE5.
Strike Energy share price review
Over the past 12 months, Strike Energy shares have jumped close to 90%, and are up over 20% year-to-date. The company's shares reached an all-time high of 41 cents on Monday before being hit hard today.
Based on valuation grounds, Strike Energy commands a market capitalisation of roughly $703 million, with 2 billion shares on issue.
