Strike Oil to Expand Gulf Coast Development Program
Following the successful drilling results from the Duncan 1 well on the Rayburn Gas Discovery, onshore Gulf Coast, Texas the Board of Strike Oil Limited has approved a US $15 million (net to Strike) expanded drilling and development program.
The drilling program, scheduled to commence in October 2007 and planned over a 12 month period, includes six new primarily development wells targeting the gas pay zones penetrated in the Duncan 1 well on the Rayburn discovery. A few of the wells are expected to be combined development and exploration wells with offset exploration targets on the large Rayburn Prospect (500 Bcf) and other wells may include further exploration drilling from the Canyon (20 Bcf), Rodeo (240 Bcf) and Flint (40 Bcf) prospects.
Revenues from a successful development drilling program are expected to increase Strike Oil's current income stream from US$8.6 million in 2006/2007 to more than US$20 million in the 2008/2009 year and place the Company in a cash flow positive position.
In addition to the approved drilling and development program and following finalisation of key agreements for surface facilities, transport and gas sales and the installation of facilities the initial testing of the Duncan 1 well is planned to commence in early September. The development drilling of the shallower Wilcox pay interval in the Duncan 1 well is planned for October 2007. The rapid installation of production facilities will enable initial test gas and subsequent production to be sold immediately.
The Company expects to fund its US$15 million share of the proposed drilling and development program from its existing cash flow from the Mesquite Project, new revenue from Rayburn development, a possible small debt facility and a A$10 million entitlement issue, details of which will be announced at a later date.
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