TIDMTLOU
RNS Number : 8994W
Tlou Energy Ltd
15 February 2017
15 February 2017
Tlou Energy Limited
("Tlou" or "the Company")
Tlou achieves significant increase in Gas Reserves
Tlou Energy Limited, the AIM and ASX listed company focused on
delivering power in Botswana and southern Africa through the
development of coal bed methane ("CBM") is pleased to announce a
significant upgrade of Reserves for the Lesedi CBM Project
("Lesedi") and initial Reserves for the Mamba Project in Botswana.
This latest Reserves assessment has been independently certified by
Dr Bruce McConachie of SRK Consulting (Australasia) Pty Ltd
("SRK").
Highlights:
Ø 44% increase in 2P (Proved and Probable) Gas Reserves to 3.9
billion cubic feet (BCF)
Ø 390% increase in 3P (Proved, Probable and Possible) Gas
Reserves to 261 BCF
Ø The increases comprise:
-- additional certified Reserves in the Lesedi Project area (PL
002) based on a southern extension of the Selemo pilot area;
and
-- initial certified Reserves in the Mamba Project area (PL's
238 and 240) based on a western extension of the Selemo pilot
area.
Tlou Managing Director Tony Gilby said, "This significant
upgrade in Reserves reinforces the commerciality of the Lesedi Gas
Project. The success of the Selemo pilot in producing sustained gas
flows for a substantial period suggests that there is significant
gas production potential for the area. Our ongoing work to assess
this continues in tandem with our planning for the staged delivery
of a commercial CBM power facility, for which we have received a
detailed Request for Proposal from the Government of Botswana.
We are very pleased to have received the first gas Reserves in
the Mamba Project area, which demonstrates the upside available
within our portfolio. Together, we believe that the Lesedi and
Mamba projects will continue to develop into a valuable resource
for Tlou shareholders as we work towards increasing the certified
gas Reserves in both areas. Furthermore, the Company is on track to
become the first gas to power producer in Botswana."
In accordance with the Society of Petroleum Engineers ("SPE")
2007 Petroleum Resource Management System ("PRMS") Guidelines, as
well as the 2011 Guidelines for Application of the PRMS approved by
the SPE, SRK has attributed Gas Reserves to Tlou's 100% interest in
the Lesedi and Mamba Project permits using the deterministic method
of petroleum Reserves estimation as at 1 January 2017.
The table below, in billion cubic feet (BCF) and petajoules
(PJ), summarises the changes to the Company's Reserves position for
Lesedi and Mamba as at 1 January 2017.
Table 1: Lesedi and Mamba Independent Gas Reserves Certification
(Lower Morupule seam only)
Tlou Interest (100%) Gas Reserves (BCF) Gas Reserves (PJ)
(1) (2)
---------------------- ----------------------- ----------------------
Category 1P 2P 3P 1P 2P 3P
---------------------- ------- ----- ------- ------- ---- -------
01 January 2017
certification by
SRK 0.17 3.9 261.1 0.14 3.2 242.7
---------------------- ------- ----- ------- ------- ---- -------
26 September 2016
certification by
SRK 0.1 2.7 52.9 0.1 2.1 42.2
---------------------- ------- ----- ------- ------- ---- -------
Increase 0.07 1.2 208.2 0.04 1.1 200.5
---------------------- ------- ----- ------- ------- ---- -------
Notes to Tables 1 above:
1) Tlou's Gas Reserves have not been adjusted for fuel or
shrinkage and have been calculated at the wellhead (which is the
reference point for the purposes of ASX Listing Rule 5.26.5) for
the Lower Morupule seam only.
2) The energy content of the gas was determined by SRK at
different quantities for the Lower Morupule coal seam based on
corehole gas composition in the individual areas where Reserves
were certified.
SRK has consented to the information in this announcement being
released.
Additional information in relation to the Gas Reserve estimates
for PL002/2004 (Lesedi CBM Project) and PL's 238/2014 and 240/2014
(Mamba CBM Project), which is the subject of this announcement, and
required to be disclosed pursuant to Chapter 5 of the ASX Listing
Rules, is set out in Appendix 1 of this announcement.
The Lesedi Reserves Statement received from SRK represents an
updated independent certification that is based on SRK's review of
regional data surrounding the Selemo pilot area to the south and,
consistent with the prior Reserves assessment (announced to the
market on 12 October 2016), relates only to the Lower Morupule coal
seam.
The Mamba Reserves Statement received from SRK represents an
initial independent certification that is based on SRK's review of
regional data to the west of the Selemo pilot area and relates only
to the Lower Morupule coal seam. In both cases, the Reserves
estimates in these southern and western extension areas were based
on the high level of stratigraphic continuity of the Lower Morupule
coal seam and data about the reservoir and gas quality from prior
corehole data and seismic activity.
An updated Gas Reserve and Resource statement for all of Tlou's
tenements as at 1 January 2017 is shown in Table 2 below, in
accordance with ASX Listing Rule 5.25.3. It should be noted that
the Reserves assessment by SRK (which is the subject of this
announcement) did not include a review and assessment of Contingent
Resources in the Mamba Project area.
Table 2: Tlou Net Gas Reserves and Resources for all tenements
and seams - BCF
Tlou 100% interest
-------------------------------------------------------------------------------------------------------
Location Project Tlou Gas Reserves Gas Contingent Gas Prospective
Interest (BCF) (1) Resource (BCF) Resource
(2) (BCF)
(3)
----------- ------------------- ---------- ----------------- -------------------- ----------------
1P 2P 3P 1C 2C 3C
------------------------------- ---------- ----- ---- ---- ----- ----- ------ ----------------
Lesedi
Karoo CBM (Lower
Basin Morupule
Botswana coal) 100% 0.15 3.5 117 4.3 67.4 470 -
(PL002/2004)
------------------------------- ---------- ----- ---- ---- ----- ----- ------ ----------------
Lesedi
CBM (all
Karoo coal seams)
Basin (PL001/2004,
Botswana PL002/2004)(4) 100% 0.15 3.5 117 4.3 235 3,183 -
----------- ------------------- ---------- ----- ---- ---- ----- ----- ------ ----------------
Mamba
CBM
(Lower
Karoo Morupule
Basin coal (PL238/2014 n/a n/a n/a
Botswana PL240/2014) 100% 0.02 0.4 144 (5) (5) (5) -
----------- ------------------- ---------- ----- ---- ---- ----- ----- ------ ----------------
Karoo PL003/2004,
Basin PL035/2000, 8,596
Botswana PL037/2000 100% - - - - - - (6)
----------- ------------------- ---------- ----- ---- ---- ----- ----- ------ ----------------
Notes to Table 2 above:
Gas Resource numbers have been rounded to the nearest tenth for
amounts less than 100 BCF, otherwise to the nearest whole number.
Refer to Competent Persons Statement in Appendix 2 of this
Announcement.
1) Tlou's Gas Reserves have not been adjusted for fuel or
shrinkage and have been calculated at the wellhead (which is the
reference point for the purposes of Listing Rule 5.26.5).
2) Contingent Gas Resources are (100%) Unrisked Gross and are
derived from the SRK certification at 31 March 2015 for all coal
seams (as previously announced by Tlou on 9 April 2015) with
adjustment for the gas volumes which have now been certified by SRK
in the Gas Reserves category.
3) ASX Listing Rule 5.28.2 Statement relating to Prospective
Resources:
The estimated quantities of petroleum gas that may potentially
be recovered by the application of a future development project(s)
relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further
exploration appraisal and evaluation is required to determine the
existence of a significant quantity of potentially moveable
hydrocarbons.
4) The Gas Reserves and Contingent Gas Resources for all coal
seams in PL001/2004 and PL002/2004 shown in the second row of Table
2 includes the numbers for the Lower Morupule coal seam which are
shown in the first row of Table 2.
5) The current Reserves assessment by SRK which is the subject
of this announcement did not include a review and assessment of
Contingent Resources in the Mamba Project area.
6) Prospective Gas Resources are (100%) Unrisked Gross and are
derived from a report to Tlou from Netherland, Sewell and
Associates Inc (NSAI) dated 16th February 2012 regarding
certification for all coal seams located in the remaining
prospecting licences (as previously announced by Tlou in its
prospectus dated 20 February 2013).
Overview of SRK
SRK is an independent, international group providing specialised
consultancy services, with expertise in petroleum studies and
petroleum related projects. In Australia SRK has offices in
Brisbane, Melbourne, Newcastle, Perth and Sydney. SRK has completed
Reserves and Resource assessments for a number of clients in
Australia.
For further information regarding this announcement please
contact:
Tlou Energy Limited +61 7 3012 9793
--------------------------------------- ---------------------
Tony Gilby, Managing Director
--------------------------------------- ---------------------
Solomon Rowland, Company Secretary
--------------------------------------- ---------------------
Grant Thornton (Nominated
Adviser) +44 (0)20 7383 5100
--------------------------------------- ---------------------
Samantha Harrison, Colin Aaronson,
Harrison Clarke
--------------------------------------- ---------------------
Brandon Hill Capital (Joint
broker) +44 (0)20 3463 5016
--------------------------------------- ---------------------
Jonathan Evans, Alex Walker
--------------------------------------- ---------------------
Optiva Securities Limited
(Joint broker) +44 (0)20 3137 1904
--------------------------------------- ---------------------
Jeremy King, Christian Dennis
--------------------------------------- ---------------------
St Brides Partners Limited +44 (0) 20 7236
(Public Relations) 1177
--------------------------------------- ---------------------
Elisabeth Cowell, Lottie Brocklehurst
--------------------------------------- ---------------------
FlowComms Limited (Investor +44 (0) 7891 677
Relations) 441
--------------------------------------- ---------------------
Sasha Sethi
--------------------------------------- ---------------------
APPIX 1 - ADDITIONAL INFORMATION REQUIRED UNDER CHAPTER 5 OF THE
LISTING RULES
Description of Land Area, Tenure and Economic Interest LR
5.25.5, 5.31.3 & 5.31.7
Tlou has a 100% interest in and operates ten prospective CBM
licences in Botswana. The licence PL002/2004 forms part of the
Lesedi Project area. PL002/2004 is located in the Karoo-Kalahari
Basin, Botswana, which contains a significant proportion of
Southern Africa's coal deposits. The most recent work in PL002/2004
has consisted of horizontal pilot well drilling in an area known as
the Selemo pilot area.
Prospecting Licences PL238/2014 and PL240/2014 form part of the
Mamba Project area. PL0238/2014 and PL240/2014 are located in the
Karoo-Kalahari Basin, Botswana, which contains a significant
proportion of Southern Africa's coal deposits. The most recent work
in PL0238/2014 and PL240/2014 has consisted of desk top analysis of
existing geological data comprising stratigraphic corehole and
seismic geophysical data.
PL002/2004 was most recently renewed for a further 2-year term
on 1 April 2015. The next renewal date for the permit is due 31
March 2017 unless the licence area is converted to a Mining Lease
(ML) prior to this date.
PL238/2014 and PL240/2014 were most recently issued for a 3-year
term on 1 July 2014. The next renewal date for the permit is due 30
June 2017 unless the licence area is converted to a Mining Lease
(ML) prior to this date.
The Gas Reserves reported in this announcement for the Lesedi
Project area PL002/2004 have been calculated net of a Government
royalty of 3% of wellhead revenue and a royalty payable to the
previous owner Sekaname Pty Ltd of ZAR2.00 per 1,000 standard cubic
feet (SCF) produced at the wellhead or 12.5% of the wellhead
selling price of the gas produced (less certain transport and
logistical costs), whichever is greater.
The Gas Reserves reported in this announcement for the Mamba
Project area PL238/2014 and PL240/2014 have been calculated net of
a Government royalty of 3% of wellhead revenue.
Overview of Operatorship of Production LR 5.31.2
Tlou has operated all assets on PL002/2004 since 2009.
Tlou has operated all assets on PL238/2014 and PL240/2014 since
2014.
Lesedi Gas Project LR 5.31.4 and Previous Lesedi Gas Project
Contingent Resource Upgrade LR 5.34
A large range of technical data has been obtained over the wider
Lesedi project area, particularly in the PL002/2004 Block, in order
to understand the commercial nature of this resource. Core
laboratory analysis, with wireline log analysis has been undertaken
with a range of both short and long term flow testing methods which
include drill stem tests (DST), wireline conveyed flow testing
tools (MDT) and wells, completed with progressive cavity pumps, put
on long term pilot testing to achieve both water and gas flow rate
measurements while a reservoir pressure drop around the general
area of the pilot wells is being achieved.
The Reserves certification report has been prepared by SRK
utilising a deterministic estimation method. New technical data
from the Selemo pilot program secured since the initial Gas
Reserves report by SRK in October 2016 the high level of
stratigraphic continuity of the Lower Morupule coal seam and
confirmed data about the reservoir and gas quality has resulted in
the upgrade of Gas Reserves (refer Table 1) certified by SRK for
the Lesedi CBM Project.
Due to the large amount of technical data, the performance of
the initial Selemo pilot program, and the relatively close
proximity of Lesedi to the Botswanan electricity network, SRK is of
the opinion that 1P, 2P and 3P Reserves volumes are justified and
warranted.
Mamba Gas Project LR 5.31.4
The Mamba Gas Project Area is adjacent to the Lesedi Gas Project
Area. A large range of technical data has been obtained over the
wider Lesedi Project area, particularly in the PL002/2004 Block, in
order to understand the commercial nature of this resource. Core
laboratory analysis, with wireline log analysis has been undertaken
with a range of both short and long term flow testing methods which
include drill stem tests (DST), wireline conveyed flow testing
tools (MDT) and wells, completed with progressive cavity pumps, put
on long term pilot testing to achieve both water and gas flow rate
measurements while a reservoir pressure drop around the general
area of the pilot wells is being achieved. Further geological work
re-examining existing aeromagnetic and seismic data as well as core
analysis from the Mamba Gas Project Area has also been
undertaken.
The Reserves certification report has been prepared by SRK
utilising a deterministic estimation method. New technical data
from the Selemo pilot program secured since the initial Gas
Reserves report by SRK in October 2016, as well as the geological
work re-examining technical data from the Mamba Gas Project Area
has resulted in the initial certification of Gas Reserves (refer
Table 1) certified by SRK for the Mamba CBM Project.
Due to the large amount of technical data, the performance of
the initial Selemo pilot program, and the relatively close
proximity of Mamba to the Botswanan electricity network, SRK is of
the opinion that 1P, 2P and 3P Reserves volumes are justified and
warranted.
Estimated Quantities (in aggregate) to be recovered LR
5.31.5
There have been no other changes to the assumptions detailed in
the Company's announcement 12 October 2016 as regards to estimated
quantities to be recovered.
Statement in relation to Undeveloped Petroleum Reserves LR
5.31.6
The Lesedi CBM Project continues in the appraisal phase with
three working pilots in the Selemo area situated in the southern
part of the block. It is likely that further wells will be required
to continue to obtain data on coal parameters, in particular in the
northern and more eastern parts of the block, before a development
decision can be made. Therefore, at this point, it is not possible
to detail when development is anticipated. It is likely that
further conversion of Contingent Resources to 2P and 3P Reserves,
and migration of 3P Reserves to 2P Reserves will be required before
a development decision can be finalised.
The Lesedi Reserves and Resource volumes presented in this
report reflect an update to the prior Reserve and Resource
estimates released by Tlou in September 2016.
In November 2015, Botswana's Government Ministry of Minerals,
Energy and Water Resources issued a request to submit technical
information for the supply of emergency power to address the
country's chronic power deficiency and to assist fast tracking the
development of the gas industry in the country. The initial
proposal submitted by Tlou was for a 10MW gas-to-power pilot
project. As announced on the ASX and AIM markets on 10 January
2017, Tlou received a request for proposal to tender for and
develop a CBM power plant of up to 100MW at the Lesedi CBM Project.
The application process involved approval by Botswana's Government
Cabinet, following which it was reviewed by the Public Procurement
and Asset Disposal Board and then the receipt of the request for
proposal. The next step is for the Company to finalise work on a
detailed proposal for submission to the Botswana Government for the
supply of CBM power in modular stages, including negotiations with
various third parties on the terms of an off-take agreement,
network access and project funding.
The Lesedi CBM Project currently has no gas transportation
infrastructure in place. Infrastructure, which is owned by the
Botswana Government, exists approximately 70km to the east of the
Lesedi Project (for map see Appendix 3 of this announcement
available on Tlou's website http://tlouenergy.com/). Depending on
the scale of any Lesedi development, this infrastructure may not be
sufficient for Lesedi and additional infrastructure may be required
and would be considered under any Lesedi development plan.
As announced by Tlou on the ASX and AIM markets on 29 September
2016, Botswana's Department of Environmental Affairs ("DEA") has
approved the Environmental Impact Statement ("EIS") submitted by
the Company in December 2015 for its Lesedi CBM Project as well as
its CBM exploration activities in the Mamba Gas Project area. The
DEA considers that the EIS adequately addressed the relevant
impacts associated with the proposed development at the Lesedi
Project and the proposed CBM exploration activities at the Mamba
Project.
Material Economic Assumptions LR 5.31.1
The material economic assumptions used by SRK to calculate the
estimates of Gas Reserves for the Lesedi and Mamba CBM Projects
referred to in this announcement are as follows:
-- Production data derived from the currently producing Selemo Wells (Selemo 1P, 1AR, 4P);
-- The initial development plan for a proposed 50MW power generation project;
-- A number of wells drilled by Tlou within the area increasing
the confidence in the continuity and consistency of net coal within
the area;
-- Development well spacing is assumed to be 150 metres;
-- Capital expenditure per well has been derived from the most
recent drilling and completion campaign of the Selemo area with
some savings assumed for a larger, longer term production drilling
campaign and estimates for downstream capital such as power plants
and transmission lines;
-- Economic considerations in confirming commerciality of the
relevant Reserves include deducting from estimated revenues the
estimated operating costs, royalties and taxes, and future capital
expenditure investment; and
-- Net gas pricing assumptions used to estimate Tlou's share of
future revenues have been derived from the current and longer term
energy pricing market in the region.
APPENDIX 2 - Competent Person Statement and ASX Listing Rules
Chapter 5 - Reporting on Oil and Gas Activities
The estimate of Reserves in PL002/2004, PL283/2014 and
PL240/2014 and Contingent Resources in PL002/2004 as part of the
Lesedi and Mamba CBM Project area provided in this announcement
(refer certification in Table 1 and Table 2) is based on, and
fairly represents, information and supporting documentation
determined by Dr Bruce Alan McConachie of SRK Consulting
(Australasia) Pty Ltd in accordance with Petroleum Resource
Management System guidelines. Dr McConachie is an Associate
Principal Consultant of SRK Consulting (Australasia) Pty Ltd, and
is a qualified person as defined under the ASX Listing Rule 5.42.
Dr McConachie is a member of the American Association of Petroleum
Geologists, as well as being a member of The Society of Petroleum
Engineers. Dr McConachie has consented to the publication of the
Reserve and Contingent Resource estimates for Lesedi in the form
and context in which they appear in this announcement.
The Contingent Gas Resource estimates for PL001/2004 and
PL002/2004 provided in this statement were originally released to
the market in the Company's announcement of 9 April 2015, and were
estimated using the deterministic method with the estimate of
Contingent Resources for PL001/2004 and PL002/2004 not having been
adjusted for commercial risk.
Tlou confirms that it is not aware of any new information or
data that materially affects the information included in the two
announcements referred to above and that all of the material
assumptions and technical parameters underpinning the estimates in
the announcements continue to apply and have not materially
changed.
Company Information
Tlou Energy is an AIM and ASX listed company focused on
delivering power in Botswana through the development of coal bed
methane ('CBM') projects. Botswana has a severe energy shortage and
is currently relying on expensive imported power and diesel
generation to deliver its requirements. However, as the 100% owners
of the most advanced gas project in the country, the Lesedi CBM
Project, Tlou Energy provides investors with access to a compelling
immediate and longer term opportunity using domestic gas to produce
power and displace the expensive diesel and import market.
The Company is led by an experienced Board, management and
advisory team including individuals with successful track records
in the Australian CBM industry.
Since establishment in 2009 the Company has significantly
de-risked the project in consideration of its goal to become a
significant gas to power producer. The Company has the most
advanced CBM project in Botswana and flared its first gas in 2014.
It holds 10 Prospecting Licences covering an area of 8,300Km(2) and
the Lesedi Project already benefits from significant, independently
certified Contingent Gas Resources of 3.2 trillion cubic feet (3C)
and independently certified Gas Reserves.
The Company is planning an initial scalable gas-to-power project
in Botswana. Following successful implementation of this first
scalable project, the Company plans to expand to provide further
power to Botswana and the southern African region.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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