Investors get excited about Talon on Strike’s Perth Basin success
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Talon’s share price is on the march after Strike Energy revealed it would be drilling another Perth Basin well following success at its West Erregulla prospect, and that it would also soon be drilling the Walyering-5 well it is a partner in with Talon.
Talon Energy (ASX:TPD) shares have surged 50% since the end of June, with Tuesday’s announcement igniting a trading frenzy in the junior oil and gas explorer.
Over 170 million shares have changed hands in the past two days.
Talon Energy (ASX:TPD) share price chart
This momentum was sparked by Strike Energy’s (ASX:STX) announcement on Tuesday that it would be drilling the Walyering-5 well with Talon in September followed by a new Perth Basin well, South Erregulla-1, in October.
Strike’s success at West Erregulla is what put the Perth Basin on the map as an exploration hotspot and it was the company’s leveraging of its knowledge to de-risk Walyering that led Talon to take up a 45 per cent stake in the project.
At Walyering-5, Talon and Strike are targeting an in-place best estimate prospective resource net to Talon of up to 38.7 billion cubic feet of gas and 0.98 million barrels of condensate.
Walyering-5 well has already shown evidence it hosts good quality gas, containing less than 1 per cent carbon dioxide, thereby requiring minimal processing and lowering the cost of production.
Additionally, the high condensate ratio has the potential to further enhance the economics of Walyering.
These factors combined with the permit’s proximity to both existing pipeline infrastructure and potential commercial gas users could see rapid commercialisation of any discovery, Talon says.
A clear indicator of the confidence Strike has in the prospectivity of the Perth Basin is its commitment to drill a new well at the South Erregulla prospect.
Strike says South Erregulla represents potentially significant near-term multi-trillion-cubic-feet of gas upside and has been materially de-risked through the West Erregulla exploration and appraisal campaign.
“Extending the Permian Gas Fairway down to South Erregulla and reinjecting new value into the Jurassic wet gas play in the South will, on success, have cascading effects across the value of all of Strike’s adjoining acreage in the Basin,” managing director and CEO Stuart Nicholls said.
That includes the Walyering-5 partnership with Talon.
Strike says Walyering is an excellent test-case for the geotechnical work it has carried out across the Jurassic Wet Gas Play in the Cattamarra sequence.
“Should the appraisal drilling prove up a commercial development, then Strike expects this will be a catalyst for a material uplift in valuation of its 1,853sqkm acreage position across the play, which includes the large Ocean Hill structure where a significant contingent resource has been booked,” the company noted.
Success at Walyering would similarly see a material re-rating for Talon’s much larger Condor project, which already has prospective resource upside of over 700 billion cubic feet of gas.
Talon also has a right of first refusal over the Ocean Hill gas discovery.
In the past year, Talon has spiked 800% thanks to a new strategy, fresh new image and plenty of cash in the bank.
Shareholders recently approved a name change from Talon Petroleum, the company has raised over $10m and has several near-term catalysts on the horizon.
This article was developed in collaboration with Talon Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.