Kinetiko Energy Ltd (ASX:KKO) is in the process of negotiations with drilling contractors to undertake the upcoming 3-well drilling program at its flagship Amersfoort Project in South Africa.
The drilling is within 400 metres of Kinetiko’s proposed gas collection terminal at Amersfoort where access and infrastructure is in place.
Kinetiko’s aim is to develop the ‘elephant-scale’ 4.9Tcf (trillion cubic feet) prospective gas resource over known coal sequences in the proven and highly prospective Permian Age Coal Fields.
Drilling to commence in early Q4 2021
Kinetiko has sourced casing for three well sections per borehole, with a qualified threading supplier ready to fabricate connections, and the company is contracting a specialist cementing supplier to ensure 100% well integrity.
With site selection completed, field works last week were commenced on site for the preparation of drill pads for the three new wells KA-03PT7, KA-03PT8 and KA-03PT9.
Drilling is estimated to commence in early Q4 2021.
Aeromagnetic survey
A fourth high-resolution aeromagnetic survey has been confirmed to follow up the success of similar surveys completed across the Amersfoort Project.
The survey is planned to fly a 13,479 line kilometre survey covering 564 square kilometres, over selected portions of ER 270 and ER 272 which form the most southern and northern extensions of the company’s exploration rights.
Results from the completed survey are anticipated to be received during late October 2021.
Consolidation of 7,000 square kilometres
Earlier this year, Kinetiko strengthening its position in gas-hungry South Africa by securing 100% of the Amersfoot Project.
The company executed a binding terms sheet with Badimo Gas Pty Ltd to acquire the remaining 51% of Afro Energy Pty Ltd, making Kinetiko the sole owner of all exploration rights and production approvals.
This move streamlines the exploration and development of nearly 7,000 square kilometres of the geologically and infrastructure rich land position which hosts a 4.9Tcf (2C) resource.
The merger parties have now satisfied the suspensive conditions of the binding term sheet with taxation structuring now settled enabling the definitive share purchase agreement to be executed.
This enables the completion of the merger to occur before the end of the year.
Pilot production funding
Negotiations with South African institutional to fund a pilot production field have advanced after completing successful due diligence.
A decision to invest has been made and formal documentation is now being produced.
The company has commenced a production right application over the newly consolidated ER271 which was recently approved by the South African government.
This will help streamline the development of production fields over 1,287 square kilometres of prospective geology and improve the economics by not having to make multiple production right applications.
Kinetiko is also advancing negotiations with potential off-takers for any gas production that can be optimised.
Clear roadmap
Kinetiko has a clear roadmap for 2021 to become a major gas player in the region:
The company believes its shares are undervalued compared to peers, equating to a significant growth potential:
