When Only The Best Will Do

Anyone buying outside of the Dandaragan Trough is probably wasting their time and money I reckon. Anyone buying too far south is dreaming as the depth will likely render it un-drillable, anyone buying too far north is wasting their time as it's already been drilled.  There is only one minnow that I think has a real shot other than STX but IMO it's better to stick will the real deal. WGO share in this discovery will never match in value as they have 50% ownership in only a select part of the fairway being established. STX have 100% ownership in several blocks in the now proven fairway.

The discoveries to date share one key element, they are all in the Dandaragan Trough. This trough has been drilled to the North and is too deep to drill to the South. To the East the trough is cut off by the Urella fault, to the West the Beagle ridge appears to be the boundary.


There is a sweet spot that is common to all major finds so far. From the below overlay you can see that the wells which have successfully encountered gas all sit within the sweet spot of the trough



At first glance you might wonder if the productive zone could continue north, if this were the case then the productive formations should be encountered at shallower depths as you head north. The below decisively answers that with a big NO. Dozens of wells have been drilled to the North, none of which were anywhere near as good as Waitsia or WE2. North Erregulla 1 (3444m), Moriary 1 (2550m) etc are in the zone but appear not to have gone deep enough



So who owns the sweet spot?

The map below shows the tenement boundaries for the key area of the fairway. The majors have a fair chunk locked up MIN have 80% of EP368 and 78% of EP426. EP413 is a venture between NWE/Mitsui and Bharat. The dark blue section which includes Waitsia is locked up by a JV between BPT and Mitsui. The Tan section is 100% STX while the orange is 50/50 with WGO. STX will soon have a a half share in the best chunk of dirt in the basin while having 100% in the most prospective blocks in the fairway. This IMO is why STX commands such a premium to WGO and will continue to do so.



In the coming months I'd bet my lefty that STX are subject to a takeover at a considerable premium. There is little point chasing the rest if already holding the best!