The Strike Energy Ltd (ASX: STX) share price is in negative territory today. This follows the energy company's update on the South Erregulla drilling operations at the EP503 site.
Strike Energy holds a 100% interest in EP503. 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 bidding for 26 cents apiece, down 1.89%.
What did Strike Energy announce?
Investors are selling off Strike Energy shares after digesting the company's latest release.
In its statement, Strike Energy advised it has successfully drilled through the lower Carynginia Formation and the Irwin River Coal Measures.
Mud has previously been observed at the South Erregulla-1 (SE1).
So far, a measured depth (MD) of approximately 4,859 meters has been drilled.
Management believes the target to be a short distance away from the top part of the sub-section of the primary target in the Kingia Sandstone.
Currently, Strike Energy is pulling out the bottom hole assembly to reconfigure and acquire core in this section.
Once completed, the team will proceed to core a 45 meter interval. However, the company noted that this could take several attempts to achieve.
Once completed, the company will return with the drilling assembly to drill through the Bit Basher Shale, the High Cliff Sandstones. A final depth call will then follow in the Holmwood Shale area.
Strike Energy noted that South Erregulla has significant resource potential in the Kingia Sandstones with a high chance of success. This is due to the strong data control over the Erregulla region, consistent geological outcomes, and recent identification of updip connectivity in the West Erregulla gas field.
Strike Energy share price review
Over the past 12 months, Strike Energy shares have lost close to 18%, but are up over 25% year to date. The company's shares reached a 52-week low of 14.5 cents in early December, before rebounding higher.
Based on valuation grounds, Strike Energy commands a market capitalisation of roughly $526.53 million, with 2.03 billion shares on issue.
