stx stocks to watch

Last January the Ferret wrote about Strike Oil Ltd (ASX:STX) in the following vein.

"Strike Oil is a producer/explorer with a strong cash flow and track record of discoveries.

"The company is presently modestly priced at 29c as oil and gas prices continue to surge higher."

Yesterday, Strike shares changed hands at 33.5c.

The Strike team is highly experienced with strong partners and an innovative approach to E&P.

It is an Australian-based oil and gas explorer and producer with operations in Australia and the US.

Strike Oil's operations are focused on some of the most productive oil and gas basins in these countries.

With continued growth, a strong increase in production and revenues of $10 million in the past financial year, Strike Oil is well positioned for another successful year in 2008 with production from the Rayburn project onshore Gulf Coast, Texas, coming on stream.

In the latest update of Rayburn output, average daily production from the Duncan 1 and 2 wells and the Gilbert Freeman 1 well was maintained at a combined rate of about 24 million cubic feet of gas and 660 barrels of condensate per day.

Plans for testing of the Duncan 3 and Gilbert Freeman 2 wells remain on schedule with the testing of Duncan 3 due to commence next week.

NEW PROJECT WITH PROSPECTS

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This week Strike Oil reported details of the coal-to-liquids (CTL) focus for its Futurgas project, to be located near Kingston in South Australia.

The project, which is operated by Strike's subsidiary, Hybrid Energy Australia Pty Ltd, has been advanced to incorporate a CTL gasification facility with integrated electricity generation.

It will evaluate carbon capture and storage (CCS) technology.

The Futurgas facility will have a potential production output of 10,000 barrels of petroleum liquid fuels per day and 40MW of electricity.

With the current strong market demand for cost-effective quality liquid fuels and electricity to meet Australia's growing demand for power, Strike believes that there will be opportunities during the next 12 months to negotiate favourable arrangements with industry players and investors.

Access to government grant funding is also being sought.

Key features of the proposed Futurgas project include:

* An extensive 578 million-tonne JORC compliant lignite resource which is ideally suited to the gasification process;

* A technology development agreement with the University of Adelaide to define the process and conditions required for utilising the Kingston coal in the gasification process;

* A competitive position in the emerging CTL fuels market in Australia;

* The capacity to produce 10,000 barrels of liquid fuels per day and to generate annual revenues in the order of $450 million;

* 30 years of production will amount to 100 million barrels of liquid fuels utilising approximately 100 million tonnes of lignite; and

* An experienced management team with the ability to deliver on all aspects of the project.