Tlou Energy makes decent progress at Lesedi project

Botswana and southern Africa-focussed power delivery company Tlou Energy updated the market on the status of field operations at the Lesedi coal-bed methane project in Botswana on Monday, confirming it had drilled all six wells which comprised the Lesedi 3 and Lesedi 4 development pods as part of its recent field drilling programme.

The AIM-traded firm said each pod comprised one vertical production well and two lateral wells.

It said the programme was carried out “efficiently and safely” as a result of the work of the field personnel, with the two pods located adjacent to the company's proposed central gas gathering and power generation facility.

The geological region in which the pods were located had intersected a gassier trend based on an extensive geological review of the sub-surface using all available geological and production data to date, the board explained.

Prior to starting the programme, Tlou Energy purchased a “significant amount” of drilling equipment which enabled it to control costs and timing of the program.

The net result is that the drilling programme was completed on time and in line with budget, which the directors said was a “significant achievement”, demonstrating its ability to deliver a cost-effective and timely program in the Kalahari Desert.

It said that importantly, when the lateral wells intersected the vertical production wells, a significant amount of gas was observed bubbling from the production wells.

That occurred on both the Lesedi 3P and 4P intersects, but particularly on Lesedi 4P.

In the Lesedi 4 development pod, Tlou targeted the upper portion of the coal seam, which it said could be “very significant” for future drilling campaigns and, when combined with recently-evaluated structural trends, might provide “the key” to unlocking significant amounts of new gas reserves.

“I am very encouraged by the recently completed drilling programme and in particular the strong gas indications observed to date,” said Tlou Energy managing director Tony Gilby.

“Furthermore, the good initial water flow, which is higher than that previously observed at Selemo, is potentially indicative of good permeability and therefore potentially good gas flows in this geologically high-graded area.

“Completing the wells in a timely manner and on budget was a great effort by the field staff and they are to be commended for their achievements.”

Tlou Energy said the wells would continue to de-water over the coming weeks, with first indications of controlled gas pressure increasing anticipated in the second quarter of 2019.

As at 0906 GMT, shares in Tlou Energy were up 2.51% at 5.64p.