Shares in oil and gas development company Strike Energy Ltd (ASX: STX) are trading up 3% in the green on Monday and are now swapping hands at 16.5 cents apiece.
However, Strike Energy shares started the session poorly and traded as low as 15 cents before reversing course and landing in the green in afternoon trade.
Strike Energy shares have been on the downward slope these past 2 months. They first wiped 34% off the slate back in October after the company's maiden Perth Basin Gas Reserve came in well behind consensus estimates.
The trend has continued ever since. Today, investors are again responding poorly to a company update and have pushed the Strike Energy share price to 52-week lows.
Let's take a closer look.
What did Strike Energy announce?
Strike Energy provided an update on the appraisal drilling operations at Walyering-5 (W5) in the Perth Basin on behalf of the EP447 joint venture (JV). Strike Energy is the operator and holder of a 55% interest in the JV, whereas Talon Energy (ASX: TPD) owns the other 45% stake.
The W5 well was designed to test the "updip potential of the Walyering wet-gas discovery, and on success recommence the development of the field, which stalled under previous ownership".
Gas discovery at the site was made in the Jurassic Cattamarra Coal Measures, according to the company. Since acquiring the asset, Strike has expanded its surface area and carried out 90km2 of 3D seismic over the historical Walyering wells.
Today, Strike Energy advised that drilling is now complete at the 8.5 inch production hole section of W5 down to 3,435 metres measured depth (MD).
According to the release, the well reached total depth in only 13 days – 8 days ahead of schedule. During the drilling of the production hole, Strike Energy intersected the primary targets in the Cattamarra Coal Measures (CCM).
Positive indications of the presence of gas and conventional quality reservoir were observed whilst drilling targets in the CCM.
These were encountered close to estimates at depths of 3,098 metres and 3,176 metres MD respectively. Strike Energy observed, "elevated mud gas levels, low weight on bit penetration and well sorted, coarse grained sands in the cuttings when drilling through the A Sand, before encountering similar conditions in the B Sand".
It has since pulled out of the hole and commenced "wireline logging operations over the open hole section" in order to determine the significance of these observations.
Moving forward, the company says that it will acquire a "full suite of wireline logs over the target reservoirs before running the 5.5 inch" casing and cementing in place.
Strike Energy share price snapshot
The Strike Energy share price has been swimming in a sea of red these past 12 months. In that time, it has posted a loss of almost 39%, after sliding another 42% this year to date.
In the last month, it is also down 3% and has fallen around 6% in this past week. Each of these returns is behind the S&P/ASX 200 Index (ASX: XJO)'s return of around 10% in the last year.
