Strata-X to begin ground operations for Venus-1 in Oct. STRATA-X ENERGY: FULLY FUNDED WALLOONS CSG PILOT WELL TO COMMENCE
Strata-X Energy Ltd. and Real Energy, operator of Project Venus located within the Surat basin Walloon CSG fairway (the joint venture), plan to commence ground operations in October for its first CSG pilot well named Venus-1.
Drilling contractor Silver City, based in Roma, Australia, has been selected to drill the Venus-1 well, the project's first CSG well. The well is planned to be drilled to 400 metres, cased and then drilled out to a total depth of approximately 680 metres, leaving the highly gas-saturated Juandah coal seams open and uncased.
Shortly after the Silver City drill rig is demobilized, a Wellpro coil tubing unit will be mobilized and carry out a short-term initial water influx test. After this, about 40 different intervals of highly gas-saturated Juandah coal seams (prognoses indicate a total of 26 metres of very gassy coals) will be abrasive jetted. Abrasive jetting is a non-frack coil-tubing-deployed reservoir stimulation method, designed to improve water influx and ultimately gas flows from the targeted gassy coals. To compare the before and after stimulation results, a second short-term controlled water influx test will be carried out.
The poststimulation water influx rate and other data are needed to design production equipment and facilities. Venus-1 will be equipped with a downhole pump, surface facilities and water-handling methods as required to carry out a controlled drawdown flow test over several months.
The Venus pilot drilling and set-up are planned for October, with the subsequent production test expected to continue into early 2021. The proposed production test is designed to prove initial gas breakout and increasing gas flows over the controlled drawdown period, as required to model and predict future gas flow rates and potentially commercial gas flow rates.
The results of the production test will also be used to either expand the pilot or, if commercial flow rates are achieved, commence an aggressive appraisal program designed to certify sufficient reserves for the Venus project JV to secure gas sales agreements, allowing commercial field development.
Venus-1 fully financed through a $700,000 (Australian) placement
Strata-X is undertaking a non-brokered private placement to sophisticated and institutional investors in Australia of up to 11,666,667 units in the company at a price of six Australian cents per unit for gross proceeds of up to $700,000 (Australian). Each unit consists of one Chess depository unit (CDI) and one-half of one option. Each option will be unquoted and exercisable into one CDI at an exercise price of 12 Australian cents up until Sept. 30, 2022. Each placement CDI will represent one common share of Strata-X and will rank equally with existing CDIs. All CDIs issued pursuant to the placement are to be fully tradable and listed on the Australian Securities Exchange, subject to the necessary approvals by the TSX-V and ASX, respectively.
Funds raised from the placement will be used primarily to finance Strata-X's joint venture share of the CSG pilot well named Venus-1 on Venus project located within the Surat basin Walloon CSG fairway, for general working capital purposes and for any costs of the placement.
Strata-X chairman Ron Prefontaine has agreed to subscribe (through related entities) for any placement units not subscribed for, and has agreed that no fees will be payable in relation to any of his subscriptions. Any subscription by Mr. Prefontaine (or his related entities) will be subject to shareholder approval to be sought at the company's annual general meeting (scheduled for Nov. 13, 2020).
About Venus project
The 154-square-kilometre Venus project (joint venture between Strata-X 50 per cent and Real Energy 50 per cent) is located within the Walloon CSG fairway in the Surat basin. An independent expert has certified, on a best estimate basis, a prospective gas resource of 658 billion cubic feet (1). Given the location of this tenement immediately adjacent to gas infrastructure and within a proven giant gas fairway, the Venus project offers the potential to achieve early cash flows.
As announced on July 14, 2020, Strata-X Energy and Real Energy have agreed to merge and rename the merged company Pure Energy. Postmerger, Pure Energy will own 100 per cent of the Venus project.
(1) The prospective resources are reported as at Dec. 10, 2019. The petroleum resources are prospective resources in accordance with SPE (Society of Petroleum Engineers)-PRMS (petroleum resource management system). There are currently no reserves in the permit. Estimates for prospective resources have not been adjusted for development risk. The prospective resources are reported as 100 per cent. Strata-X's share is 50 per cent. Gross royalty over the Venus project is 10 per cent.
The prospective resources volumes were obtained by deterministic method, calculating the potentially recoverable portion of the gas in place using the overall prospect area, the mapped net coal thickness, raw gas content and coal density, as well as a range of estimates of the gas recovery factor of the coals. The review was carried out in accordance with the standards in the Canadian oil and gas evaluation handbook as amended from time to time, maintained by the Society of Petroleum Evaluation Engineers. This leads to a best estimate of prospective resources in the subject areas of 658 billion cubic feet, a low estimate of 526 bcf and a high estimate of 789 bcf (all numbers are gross 100-per-cent volumes). There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. The prospective resources estimate is based on a best estimate and a low and a high estimate.