Mpumalanga gas finds powering ahead

KINETIKO Energy, the exploration company developing natural gas finds in Mpumalanga, has executed a Memorandum of Understanding (MOU) with FFS Refiners to finalise a Gas Supply Agreement. FFS Refiners is a leading supplier of industrial heating fuels in South Africa and is seeking to supplement its industrial fuels business with the supply of liquefied natural gas (LNG). Kinetiko and FFS Refiners intend to develop a proof-of-concept gas production trial that if successful can be scaled into a long-term supply arrangement. The MOU provides for the potential of FFS Refiners to purchase natural gas produced pursuant to a binding Gas Supply Agreement.   

Kinetiko has also executed a Letter of Intent (LOI) with Grüner Energy, a South African owner and operator of energy assets in Africa, to conclude a gas development and supply agreement. Kinetiko and Grüner Energy intend to co-fund the development of a proof-of-concept gas production trial that if successful, can be scaled. The LOI provides for Grüner Energy to purchase natural gas produced for the gas development and supply agreement.

Commercial relationships, such as those with FFS Refiners and Grüner Energy, are integral to the Company’s business model of establishing interest in local JV partners to co-develop and co-fund gas production fields in South Africa. These relationships have the potential of accelerating the exploration vision with funding support.

Moreover, the identification of potential offtakers such as FFS Refiners and Grüner Energy for gas produced by Kinetiko is significant to the potential growth of Company’s gas reserves. 

This strengthens the market opportunities for Kinetiko’s significant contingent gas resource. Finally, the independent certification of gas reserves and the ability of Kinetiko to increase its gas reserves will depend on the ability of the Company to establish that there is a credible market for gas produced in what is projected to be a number of producing gas fields.

Corporate  

Kinetiko contracted SLR Consulting (SLR), global leaders in environmental and advisory solutions, to lead the process for a Production Right application being submitted. The process includes, inter alia, studies in air quality, hydrogeology, surface environment and community engagements. The same consultants will lead the re-application process for Block ER320, which previously stalled due to regulatory conflicts – now cleared – adding another 2 383km2 to the total area under rights, with the concurrent potential of increasing the 2C TCF resource count considerably.

Drilling Operations  

Significant results from gas desorption testing from Core Well 270-03C achieved gas content of over 10m3/t and rising. Wireline logging results established 153.5m of sandstone pay zones, with coal seams of combined 5.75m thickness encountered. First well where reservoir quality sandstone in the glacial Dwyka formation (below 561m) has been observed. The Core well is situated only a few kilometres from South Africa’s largest gas pipeline.  

Core Well 270-05C intersected significant gassy zones in targeted deeper carbonaceous geology. The core well is approximately 10kms from South Africa’s largest gas pipeline. Ongoing exploration success supports potential for large scale production.  

Drilling of Core Hole 270-06C intersected strong gassy sediments in targeted carbonaceous geology extending the potential contiguous gassy sandstone geology south from core well 271-23C by approximately 64km.  

Wireline logging results established 147m of gassy sandstone pay in the vertical profile, being even greater than that reported in the previous Majuba core well (~131m). Strong results from gas desorption testing from core hole 270-06C achieving gas content of nearly 7m3/t and rising.