Unlike a lot of the junior petroleum plays, Perth's Strike Oil has already hit it big. A few years back, it banked $23.5 million from selling out of the Casino gas discovery in the Otway Basin off Victoria to a Santos/AWE/Mitsui consortium.
But like a host of other Australian juniors, Strike has since turned its attention to the US.

The US is hardly an underexplored petroleum province. While Australian oil production peaked in 2000, American production reached its peak 30 years earlier and has been declining ever since.

Short of protected areas of Alaska and the ultra-deep waters of the Gulf of Mexico, there probably aren't a lot of big fields waiting to be found in the US.

But that hasn't stopped Australian juniors from looking for profitable small finds in well-known petroleum provinces like Texas, Louisiana, Oklahoma and California.

Strike already has interests in two commercial discoveries in Texas. Now an American joint venture partner is about to start flow testing at the Rayburn gas discovery, which has the potential to hold up to 500 billion cubic feet of gas. Strike will receive about 17 per cent of the revenues after taxes and royalties, which could be worth up to $425 million, or $1.52 a share, depending on the ultimate size of the discovery. The company is seeking to raise up to $10 million from an entitlement issue at 21.5c a share to help expand its production base.

Lots in the US

But given there are about 40 Australian junior petroleum companies - including bigger plays like Petsec Energy and tiddlers like GulfX - scouring the US for oil and gas finds, it can be hard for investors to separate the wheat from the chaff.
The Intersuisse analyst Paul Gooday notes a lot of the companies have only a small working interest in the projects, leaving the hard work up to American operators.

"They might get a bit of a run with gas shows but some of them haven't been able to complete the wells successfully," he says. "I haven't seen the market really fall in love with these."

Even Strike's managing director, Simon Ashton, admits these juniors are bound to fall by the wayside.

"We will see consolidation, no question" he says, adding it doesn't seem sustainable to have 40 or so Australian companies competing for the same investor attention.

Earlier this year, Patersons said the US energy sector was arguably the most competitive in the world.

"We believe it remains difficult for Australian companies to acquire assets inexpensively," the broker said. "[It] makes it difficult to generate substantial cash if prospect sizes are modest."

The Fat Prophets analyst Gavin Wendt rates Salinas Energy as a standout among the US-focused juniors since it has obtained direct entry into projects, rather than farm-ins or earn-ins.

"This has allowed it access to high-quality oil acreage under better terms, where it is the operator and can effectively control its own destiny," he says.

Gone to Italy

Given the fiercely competitive nature of the US petroleum sector, some Australian juniors have decided overseas bonanzas lie elsewhere.
Deltana Energy, a company with projects in Italy's gas-filled Po Valley, is seeking $12 million to $18 million to list on the Australian Securities Exchange.

Although it's game plan sounds very similar to another successful Australian junior, Po Valley Energy - and Deltana's managing director, Geoff Bone, admits to "emulating them" - there's no relation between the two companies.

It's not as if Deltana couldn't have grabbed some US prospects. Bone has plenty of American contacts from his days working in the Middle East.

But given gas prices are actually higher in Italy than in the US, Deltana is holding off on any potential American ambitions.