Monday, December 9, 2019

Tlou Energy gassed up

BY BONNIE MODIAKGOTLA

Tlou Energy Limited has reached yet another milestone in its gas to power project after reaching the critical stage of extracting gas from coal, a development that points to commercial viability of the gas project.

The Botswana Stock Exchange listed company focused on delivering gas-to-power- solutions in Botswana by tapping on coal bed methane (CBM) natural gas – wholly owns the most advanced gas project in the country, Lesedi CBM project, which it promotes as a solution to the region’s chronic power shortages.

On Wednesday, the company announced that the Lesedi 3 – the first dual lateral production pod completed earlier this year – has successfully reached Critical Desorption Pressure (CDP) in the horizontal wells. CPD is the pressure that gas begins to come out of the coal after a careful dewatering process, and the company has defined this as a positive milestone in its operations.

Tlou also disclosed that the next stage of operation at Lesedi 3 involves continued water pumping which should see gas pressure steadily increase inside the casing to an optimal point so that flow testing and flaring of the gas can begin. Lesedi 4 (the second pod drilled and completed) continues to be carefully dewatered in a controlled manner as planned, the company said.

“Since the commencement of production testing, the dewatering process at Lesedi 3 and Lesedi 4 has steadily progressed with CDP recently being reached at Lesedi 3. The primary objective remains to demonstrate a commercial gas flow rate,” Tony Gilby, Tlou’s managing director, said in a statement accompanying the company’s production update.

It has been a busy and productive half year for the company, underpinned by some achievements that include a new prospecting licence, delivery of drilling operations on time and on budget, production tests, winning tender stages and successfully raising capital.

In the first quarter of the year, Tlou acquired a new 3-year long coal and CBM prospecting licence from Botswana’s department of mines. The licence area is approximately 1,000 km2 and is situated adjacent to the company’s existing licences, and the company believes the area to be prospective given the encouraging results observed at the Lesedi project.

Covering an area of approximately 3,800 km2, and consisting of four coal and CBM prospecting licences and a mining licence, Lesedi CBM project, is currently Tlou’s focal point for operations ÔÇô which include dewatering the Lesedi development wells. The company said the program was a success – completing on time and within budget, with significant amount of gas observed bubbling from the production wells.

Last month, Tlou received confirmation from Botswana government that it has been chosen as a preferred bidder for the development of a “Maximum of 100 MW of Coal Bed Methane fuelled power plants in Botswana”. This follows the company’s October 2018 submission to the government’s Request For Proposal (RFQ) for the said project, of which Tlou received the highest pass mark for the compliance, technical and financial stages

On the corporate side, Tlou succeeded in raising capital from existing shareholders and a new Botswana based fund manager. In the capital raising exercise, the company sold additional 41.1 million shares to raise P30.1 million. One of the biggest buyer of the shares was Botswana Public Officers Pension Fund (BPOPF), buying about 68 percent shares that were on offer to bring its total stake in Tlou to 47.2 million or 10.49 percent of the company, which makes BPOPF the largest single shareholder in Tlou Energy Limited.

Tlou’s cash balance by end of March 2019 was P48 million, and the company has no debt, which means the company is well funded until first half of 2020, and has sufficient funds to carry out planned drilling and other activities that have the potential; to further increase existing gas reserves. Moreover, Tlou says it has received indications of funding support from a number of strategic investors as well as from Botswana Development Corporation (BDC).

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