SOUTH AFRICA'S ONSHORE GAS ENERGY SOLUTION
ASX:KKO June 2024
Executive Summary
Kinetiko Energy is a gas explorer focused on advanced shallow conventional onshore gas in South Africa. The company has discovered a world class resource, adjacent to widespread energy infrastructure and a domestic economy with an insatiable demand for gas.
LOCAL ENERGY CRISIS
1
Significant need for alternative energy supply in the region with rapidly declining coal and offshore gas energy supply driving major social and economic impacts
NEAR TERM SOLUTION
2
Onshore conventional gas supply provides a near- term solution to decreasing energy supply with initial proof of concept already completed
FULLY FUNDED EXPLORATION
3
PROJECT LOCATION
4
Kinetiko remains fully funded for CY24 five-well flow testing program
SIGNIFICANT RESOURCE
Substantial resource with 6.0 TCF (2C) Resource, anticipated to grow substantially across upcoming work program
5
LOW COST & LOW RISK DEVELOPMENT
Shallow conventional gas allows low-cost development, with local infrastructure providing fast and simple energy conversion and supply process
2
South Africa's Energy Crisis
Daily blackouts of up to 12 | Worst load shedding in |
hours causing significant | history experienced in CY23 |
social and economic | and CY24 |
damage | |
Aging coal energy supply | The need for immediate, |
historically providing over | cleaner, low cost energy is |
85% of power generation | paramount to the future |
SOUTH AFRICA LOAD SHEDDING1
% days per year with power cuts due to electricity supply shortages
100%
yearper 50% days%
-
prosperity of South Africa. | |
Only gas available from | Core to recent election was |
Mozambique is in severe | a compartment to |
decline, with domestic feed | developing gas power |
shut-outs from 2026 | projects for increased |
energy generation | |
Renewable hydro, solar and | Gas to power represents |
wind projects have | the cleanest near-term |
extensive development and | solution to the largest |
500
mmcfd | 250 |
2015 2016 2017 2018 2019 2020 2021 2022 2023
PANDE - TEMANE PRODUCTION PROFILE (PPA)2
construction timelines | problem facing the South | |||
African Government | ||||
1Loadshedding tracker, Eskom se Push & Export Finance Australia 2Annual Report of the IGUA-SA 2020 |
0
2004 2008 2012 2016 2020 2024 2028 2032 2036 2040
3
Asset Overview
A significant resource, with near-term material resource growth, in close proximity to existing energy infrastructure and major cities including Johannesburg
100% SUCCESS
All 44 wells have successfully encountered gas with large, shallow pay zones, suggesting uniform geology throughout entire tenement package
RESOURCE & RESERVE
6.0TCF (2C) ≅ 1 Billion BOE and 6.4 BCF (2P) assessed over Amersfoort pilot
LAND HOLDING
2P Reserve derived from 0.2% of granted tenements, with 6,000 km2 in acreage, allowing multiple gas field development opportunities
RESOURCE GROWTH
Anticipated to increase following flow testing program and grant of ER383 (2,383 km2) increasing project life and value. Further drilling is expected to upgrade 5.8 TCF 2U Prospective Resource into 2C Resource
DEVELOPMENT PARTNERSHIPS
Agreements in place with private and public organisations to develop the asset through pilot and full scale commercial production
4
Development
Characteristics
Gas to power represents a nearer-term solution to decarbonisation of South African energy supply away from coal-based infrastructure, with the first demonstration of Kinetiko's reservoir gas energy conversion successfully completed in Q2 CY24
NO FRACKING REQUIREMENT
Shallow conventional gas asset allowing for cost effective extraction without the requirement for fracking
CONVENTIONAL SETTING
Gas sits in sandstone and above the coals, sealed and compartmentalised into reservoirs by dolerite sill / dykes
HIGH GAS QUALITY
96%-98% measured methane, with the remainder nitrogen and extremely low CO2 measured
GAS TO POWER
Gas to power already demonstrated in May 2024 confirming the quality of gas, requiring minimal refining and the ability to generate revenue quickly upon grant of Production Right
DE-CARBONISATION
Coal based power being rapidly decreased in SA with Government highly supportive of gas as an alternate means to energy production
5
Development Strategy
Exploration | Production | Proof of Concept |
44 Exploration wells | Drill five production | Drilling additional |
now drilled with 100% | Wells to Confirm Gas | production wells |
success rate | Field Production | adding to existing 5 |
Characteristics | well Amersfoort field | |
cluster followed by | ||
installation of micro- | ||
LNG train | ||
Initial gas to power | ||
demonstration already | ||
successfully completed |
Corporate
Grant of ER383
allowing significant increase in resource
Grant of production right to allow revenue from gas production
Commercial Scale
Deliver SA's Largest Onshore LNG Project. Term Sheet with SA Government (IDC) signed for minimum 50MWe JV project
STAGE 1 | STAGE 2 | STAGE 3 | STAGE 4 | STAGE 5 |
- Kinetiko holds a clear, sequenced execution strategy to develop the basin into a position of being fully commercialised for energy delivery into the South African Energy Market
- The upcoming appraisal production wells will deliver critical flow rate and depletion curve data across five wells
- This data will then support Resource & Reserve increase in CY25
6
Near Term Strategy
NEAR TERM EXECUTION PATHWAY
Coring Wells ER270
Productions Testing Wells (Five wells)
Extended Flow Testing Results (Five wells)
IDC JV Production Wells (Five wells)
IDC JV Flow Results
Install MS-LNG systems
Production Testing Wells (ER270)
Production Testing Wells (ER272)
ER383 Grant - Resources Upgrade
Production Right Grant ER271
CY24 | CY25 |
J F M A M J J A S O N D J F M A M J J A S O N D
>
COMMENT
Confirm gassy pay zones and uniformity of geology
Assess viability of multiple development sites
Mitigate technical risk and provide data for further Reserve calculations
Initial pilot plant production cluster as part of initial IDC JV
Provide pilot plant commercial modelling characteristics
Micro LNG Pilot plant installation & commissioning
Target multiple development sites and increase reserves potential in ER270
Target multiple development sites and increase reserves potential in ER272
60% increase in landholding, vastly increasing resource/reserve potential
Secure long-term tenure and revenue generation capacity
7
Production Test Program
All five wells and subsequent flow testing will provide significant data to allow commercial development and a material level of newsflow
1
-
2
4
5
Development focused exploration program of five production / appraisal wells in southern fields (4 wells ER271, 1 well ER270)
First well located near Majuba power station expected to take 45 days to drill, subsequent four wells 30 days to drill
Program seeks to identify high flow rate gas zones and sites for development of production clusters and cluster sizes
Current Reserve assumptions use 50,000 scf/day flow rates, with a minimum of 90-day flow rates tested for each well
Each well and subsequent flow test will deliver critical data for geological modelling and drive a material newsflow pipeline for H2 CY24
Adjacent core wells identified gassy pay-zones in excess of 130m in each hole
High degree of confidence in success given that core wells observations and logging suggest potential greater than 50,000 scf/day flow rates
8
Medium Term Development
Proof of Concept
Drilling of additional production holes at existing Amersfoort field cluster
followed by installation of micro-LNG train
Commercial Scale | |||
Project Financing | Fiscal Terms | ||
KKO | IDC | ||
$48m | $138m | 70% | 30% |
$90m | $48m | $90m | |
$39m | |||
$51m | |||
Debt Cost | External Debt | Equity Cost | IDC |
Equity Cost | Total Project Cost | KKO |
Joint Venture with Industrial Development Corporation of South Africa (IDC) of
50MWe increasing to 500MWe and an option to increase to 1,500MWe
9
Board & Management
Adam Sierakowski Executive Chairman
Adam is a seasoned lawyer and founding director of Palisade Corporate and Trident Capital. With over 21 years of experience in the legal field, he has also held director positions in ASX listed companies, further demonstrating his deep understanding of the industry.
Don Ncube Non-Executive Director
Donald has a master's degree in Manpower Studies from the University of Manchester. Mr Ncube is recognised and respected as one of the reputable pioneers of Black Economic Empowerment. He is the founder and former Chairman and Chief Executive Officer of Real Africa Holdings (Pty) Ltd, a listed company on the JSE.
Rob Bulder Non-Executive Director
Rob qualified as a Chartered Accountant in 1987 and has over 30 years of commercial experience. Mr Bulder has held numerous senior management and executive board positions in the manufacturing, financial services, IT, airline and gas industries, overseeing multi-billion Rand budgets.
Robert Scharnell Non-Executive Director
Robert is an experienced executive with over 30 years of demonstrated achievement at Chevron Corporation in establishing and implementing business strategy. He has conducted business in over 20 countries and under complex situations, for large values including negotiating multi-lingual agreements, sales/purchase transactions, and settling claims and disputes on the scale of over $1 billion in value.
Nick de Blocq CEO In-Country
Nick has over 35 years of experience as an Engineer and Manager in the Upstream Oil and Gas industry in various senior roles, including Multi-Country Operations & Functions Management and Regional Business Development with Schlumberger, Africa VP with an American corporate and COO with a Regional Solutions supplier in West Africa.
Hendrik Burger Jr Operations Manager
Hendrik Burger, or "Junior", as he is known to our team, has been with Kinetiko from the start of test well operations in 2012. He has maintained continuity for the project with the local communities and since 2012 has resided in Amersfoort, the hub of the project.
Richard Wolanski Corporate Finance
Richard Wolanski, B.Com, ACA, is a Chartered Accountant with qualifications that include a Bachelor of Commerce from the University of Western Australia. Richard has over 30 years professional experience in the finance and mining industries at an international level.
Paul Doropoulos Chief Financial Officer
Paul Doropoulos has approximately 25 years of combined experience in an Executive Consultant capacity to ASX listed companies in the energy, minerals, mining services and media sectors. Time during this period was spent as both an Executive and Non Executive Director of ASX companies.
Simon Whybrow Company Secretary
Simon is a highly driven and dedicated professional with a wealth of experience as a CFO, Company Secretary, and Commercial Manager.
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Kinetiko Energy Limited published this content on 20 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 June 2024 00:01:07 UTC.