Kinetiko Energy has continued to pursue shallow, conventional gas discoveries in energy-hungry South Africa, as outlined in its latest exploration update.
The ASX-listed energy stock has spudded its core 270-05C well — the third asset on its 270 exploration right — and ER271 has just been greenlit for renewal.
A second coring rig is scheduled to begin work on ER270 and ER272 in late April, while tenders are out for larger rigs to complete nine wells on ER271 later this year.
Kinetiko is also preparing to transform the flagship 271 block from an exploration to a production right, and it has engaged SLR Consulting to spearhead this initiative.
Spudding 270-05C
Kinetiko’s newest asset was spudded just 5 kilometres from the 270-03C core well and 10 kilometres from South Africa’s largest gas pipeline.
This well is expected to provide deeper, higher-pressured gassy sands and coal sequences, which could potentially extend from 270-03C, and develop a new fairway for future gas production.
Kinetiko CEO Nick de Blocq said the team was increasingly busy, but recent exploration success made efforts all the more rewarding.
“We began the third of our three core well campaign in Block ER270 buoyed by the achievements we realised in 270-03C,” he explained.
“We are about to step up our drilling operations from one core rig to two, as we move into an unexplored part of our exploration rights.”
A second coring rig is en-route to ER270, contracted to fast-track exploration across the tenements.
Once three core wells are completed in each block, both rigs will mobilise to ER272 and drill near global chemical company Sasol’s liquid fuels refinery.
“Northernmost Block ER272 is in the vicinity of Sasol’s liquid fuels refinery at Secunda and they are watching with great interest as a potential source of much-needed gas for their conversion from coal to liquids (CTL) to gas to liquids (GTL),” de Blocq noted.
Kinetiko is also on the hunt for some larger drill rigs, picked to execute a nine-hole campaign on the cornerstone 271 exploration right in the second half of this year.
Five of the holes are set for producer status, while the remaining four are full appraisal wells with producer potential. All nine holes have been approved by the Petroleum Agency of South Africa (PASA).
“From Q3 this year, we will be adding up to two larger rigs to the drilling fleet and tenders for the supply of these additional services has gone out to prospective contractors,” the CEO continued.
“These will provide us with at least nine wells under the initial contract scope — all of these are situated within our block ER271, the initial target block for production.”
PASA recently greenlit a renewal application for exploration right 271, which covers 1,288 square kilometres and is the proposed site for a two-year joint venture program with the Industrial Development Corporation of South Africa.
ER271 is a pivotal block for the company: it’s home to the flagship pilot production site at Amersfoort and two liquefied natural gas projects, so the renewal is key to Kinetiko’s exploration mission.
With production potential on the horizon, KKO has engaged global environmental advisor SLR to start building a production right application.
De Blocq concluded: “We are working with the regulators to achieve an expedited evaluation process, and the possibility of receiving our production right within this calendar year is something we are looking to achieve.”
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