One of the best performers on the Australian share market on Wednesday has been the Strike Energy Ltd (ASX: STX) share price.
In morning trade the oil and gas company's shares rocketed as much as 23% higher to 9.1 cents. At the time of writing they have dropped back a touch, but still sit 19% higher at 8.9 cents.
Why is the Strike Energy share price rocketing higher?
This morning Strike Energy provided the market with an update on its Jaws pilot operation at the Southern Cooper Basin Gas Project.
According to the release, Strike Energy has continued piloting the Jaws appraisal project and drawing the wells down in a careful and controlled manner.
This has led to consistent gas production being re-established and the flare stack igniting with reservoir pressure at Jaws currently at 425 psi.
Water rates have continued strongly with 450-500+ bbls/d, which confirms good productivity as the company approaches desorption. Management believes these results are both encouraging and consistent with the previous behaviour of the reservoir.
Strike Energy advised that it will continue to manage the drawdown to ensure both pump health and controlled depressurisation of the reservoir are maintained, and surface facilities have been configured to manage any sudden increases in gas production.
Southern Cooper Basin Gas Project.
Today's update appears to have gone down well with investors due to the strong potential of its Southern Cooper Basin Gas Project.
Strike Energy's Southern Cooper Basin Gas Project is targeting the gas potential of a series of very thick coals across a large portion of its permits.
Its website advises that a significant upgrade to the prospective resource was made in 2012 after high gas content and thick coal was encountered in the Marsden 1 and Davenport 1 wells. Strike subsequently drilled the Le Chiffre 1 and Klebb 1 wells in the Weena trough during 2013.
The program confirmed the presence of thick gas bearing coals, with Le Chiffre 1 and Klebb 1 encountering a total of 105m and 145m of coal respectively and both wells having an individual Patchawarra seam 35m in thickness. Klebb 1 encountered the thickest total accumulation of Permian coal known to date in the Cooper Basin.
If everything goes to plan, the company could benefit greatly along with Beach Energy Ltd (ASX: BPT) and Leigh Creek Energy Ltd (ASX: LCK) from increasing demand from the Eastern Australian gas markets.
