Technical success, page-5

• “Strike has refined its gas content to between 6.1 m3/t and 6.0m3/t in the Vu Upper - GREAT RESULT !! This is within the top third of its expected range and provides substantial evidence of the high-quality nature of Strike’s multi-TCF resource.”
• Matrix permeability actually a touch higher than in June update. Now 1.5 to 2.5 MD from 1- to 2.5MD (Fracture Perm 5-7MD)
• Potential for slightly lower porosity, but around the range previously advised in June
• Much higher desorption pressure (750-895 range v’s 650-750 prev). Gas comes on quicker as the reservoir pressure is brought down.
• Recoverable water rates expected to be 1/3^rd less per cubic metre of coal
• K1 to be tested in the VU Lower – which is a great result. As HardCash pointed out in his last post – this could be a big boost over the next few months. K2 to stay on test for further gas build. K3 to be used to test skin formation and refine matrix permeability.
• Jaws model refined and on page 9 it shows a peak flow of ~8.5mmscf/d which is better than previously advised given it was modelled on 5m3/t gas content and was ~6.5mmscf/d. (Gas content now 6-6.1 – BIG difference !). Gas flow rate to settle around 3.5mmscf/d thereafter.

Managing Director, Stuart Nicholls commented: “With the gas content of Strike’s primary coal seam coming within the upper range of our expectation, Strike is hugely excited to progress the Southern Cooper Basin Gas Project towards Commercial Success through the roll out of the Jaws Project. The magnitude and size of Strike’s multi-TCF resource is transformational in nature and will be a key enabler for natural gas regaining its place in South Australia as an affordable, abundant and reliable source of energy. The achievement of this geological milestone is a great credit to the new team here at Strike. Strike has spent considerable time building a deeper and more credible subsurface understanding of its unique depositional setting which it has achieved through a refreshed organisation with on-shore specialists from around Australia and consistent guidance and advice from Mr Cortis. This landmark was supported via the South Australian Government PACE Round 1 Program and is a cornerstone of Strike’s ability to deliver gas into the South Australian energy system by the end of 2019. Strike thanks its shareholders, partners and many stakeholders for their ongoing support.”

The damage to the reservoir around the klebb well bores is very evident, and you can see in the diagram on page 7 how the treatment of the water handling by previous operations has generated a strong positive skin from what was a negative skin to start with. When executed properly that skin would likely stay negative and permeability should remain as a result. “Performance of klebb wells today is not compatible with historical tests post fracture stimulation” “Steady draw down of bottom hole pressures mitigates skin formation”

I remember the previous managements suggestion at one point they were pushing the jet pumps to try and battle the water inflow and to push for a result. It seems not only was the water flow not as they had thought but also that they were doing a lot of damage to the wells in pushing the jet pumps hard. Basically that whole period of water handling over the last 12-18 months didn’t do the klebb pilot any favours at all.

The new management are doing a great job - Well done. Bring on Jaws !