Coal seam gas player Strata-X (ASX: SXA) has completed drilling the first well at its fully-owned project in Botswana.

The company announced that it reached a depth of 474 metres, and found promising signs of existing gas within the coal seams.

“Several coals seams were intersected with gas bubbling out of the cuttings at surface,” the company said.

Strata-X will now suspend drilling operations while it carries out testing to gauge the extent of potential gas flows.

The market is waiting for more evidence the company can extract gas from the site, with Strata-X shares down slightly in morning trade to 6.6 cents.

Hard yakka

In his comments to the market, company chairman Ron Prefontaine discussed a number of headwinds the company has faced.

He cited the remote location of the site and a “new operating environment in Botswana” as two core challenges. Drilling cost overruns amounted to $US45,000, but Prefontaine said that would prove to be money well spent.

“With the knowledge gained along with new relationships nurtured, the Company is now confident we can drill low cost and timely wells,” he said.

To test for gas, Strata-X will use conventional wireline logging methods, as well as a “state-of-the-art Borehole Magnetic Resonance” program.

“Successful calibration of the BMR logging method for the target coals will reduce the number of expensive fully-cored drill holes, plus the months required to finalise the results of each core hole,” the company said.

In other ASX energy news today

  • Oil & gas company Calima Energy (ASX:CE1) announced promising flow rates at its project in Western Canada. The first phase of testing showed its Calima-2 well was flowing at a rate of 1,640 barrels of oil equivalent (BOE) per day, largely comprised of gas flows of 9 million cubic feet (mmcf) per day. Shares in Calima were flat at 5 cents in morning trade.

  • Energy minnow Black Star Petroleum (ASX: BSP) announced the arrival of a new board member. Ms Peichen Wu is coming on deck as a non-executive director, and she’s bringing some cash with her. The company has entered into a $60,000 loan agreement with Ms Wu, with initial terms of 24 months and an annual interest rate of seven per cent. Shares in Black Star were unchanged at 0.2 cents.

  • And Petrel Energy (ASX: PRLDA) is changing its name. The company said that in the wake of the recent Warrego transaction, the company will change its name to Warrego Energy Limited (ASX: WGO), effective from March 29. The company also unveiled a new-look board, and confirmed that former managing director David Casey has resigned.