Kinetiko Energy Commences Drilling in Five-Well Gas Production Test Program
KKO (KKO) Share Update September 2024 Sunday 29th
Kinetiko Energy Begins Drilling in Major Gas Production Test Program
Kinetiko Energy Ltd (ASX: KKO) has announced the commencement of drilling at well 271-23PT, marking a significant milestone in its five-well gas production test program aimed at unlocking South Africa's energy potential.
Instant Summary:
- Drilling has started at well 271-23PT.
- Completion and first gas flow results expected by early November 2024.
- Each well will be flow-tested for up to 90 days.
- 6 TCF of 2C contingent resources confirmed with potential for growth.
- Wells are strategically located near key energy infrastructure like the Majuba Power Station.
Project Overview
Kinetiko Energy Ltd (ASX: KKO) has initiated drilling at well 271-23PT as part of its five-well gas production test program. This marks a significant step in the company's efforts to commercialize its advanced shallow conventional gas projects in the Mpumalanga Province of South Africa.
The program aims to gather critical data on gas flow rates and depletion curves, which will be instrumental in certifying reserves and planning future development clusters. The first gas flow results are expected by early November 2024.
Strategic Importance
The wells are strategically positioned near key energy infrastructure, including the Majuba Power Station, which optimizes the program's commercial potential. This proximity ensures that any discovered gas can be rapidly commercialized and delivered to off-takers.
With South Africa facing critical energy shortages, this program could play a vital role in providing cleaner, more reliable energy solutions. The data gathered from this test program will help in certifying Kinetiko's 6 TCF (2C) contingent resource and potentially increase it significantly.
Program Details
Each of the five wells will undergo an extended dewatering and gas flow testing process for up to 90 days. This will help determine flow rates and depletion curves, which are essential for modeling the economics of future gas field developments.
Well 271-23PT, located just 5 kilometers from the Majuba Power Station, is expected to provide invaluable data. Adjacent wells are also near essential infrastructure, including gas pipelines and transmission lines, further positioning Kinetiko as a potential major supplier to South Africa’s power grid.
Future Prospects
Kinetiko's existing 6 TCF (2C) contingent resource, equivalent to 1 billion barrels of oil, is expected to grow significantly as a result of this testing program. The success of this program will also aid in converting a portion of the company's 5.8 TCF of 2U Prospective Resources into contingent resources.
This program will further de-risk future drilling campaigns and accelerate Kinetiko’s efforts to become a major contributor to South Africa’s evolving energy landscape.
The commencement of this drilling program is likely to have a positive impact on Kinetiko Energy's stock, as it demonstrates progress in their efforts to commercialize their gas resources. The proximity to key infrastructure like the Majuba Power Station enhances the commercial viability of the project, which could attract investor interest.
Investor Reaction:
Analysts are likely to view this announcement positively, given the strategic importance of the wells' locations and the potential for significant resource growth. However, the actual impact on the stock will depend on the results of the gas flow tests and the subsequent data on flow rates and depletion curves.
Conclusion:
Investors should keep an eye on the upcoming gas flow results expected in early November 2024. The success of this program could significantly boost Kinetiko Energy's resource estimates and commercial prospects, making it a potentially lucrative investment opportunity.