Kinetiko Energy doubles down ahead of three-well drilling program at South African Gas Project

Kinetiko Energy Ltd (ASX:KKO) is readying to kick off a new three-well drilling program at its flagship Amersfoort Gas Project in South Africa. The new well suite will neighbour two pilot production wells at Amersfoort and be drilled just 400 metres from the energy stock’s proposed gas collection terminal, where access and infrastructure are already in place. As it prepares for the drilling program, Kinetiko is in talks with several drilling contractors, each of which has confirmed their capacity to tender for the upcoming campaign. The preparation forms part of the ASX-lister’s strategy to roll out multiple, scalable production fields across 37 potential gas compartments at Amersfoort — zones that could host hundreds of wells on just 20% of the project’s total prospective geology. Program implications Ahead of the three-well program, Kinetiko has finalised its site selection and obtained all the necessary environmental and regulatory approvals for drilling to proceed. The ASX-lister chose the location based on a review of historical geological data and potential gas compartments, identified from aeromagnetic surveys. Crucially, the new wells — if successfully completed — have the potential to become producing pilot wells. It means they could follow in the footsteps of two nearby historical wells, which recently successfully underwent a workover and achieved flow rates of 190,000 standard cubic feet per day. Imperatively, the new and existing wells could be connected and, with the newly completed terminal infrastructure, form a five-well pilot production cluster. As it prepares for the drilling program, Kinetiko hopes to undertake its tendering process over the next fortnight, with drill rigs expected to reach the site next month. From there, the company estimates it can drill and complete all three wells by November, while offtake negotiations involving any gas produced by the possible five-well cluster continue. CEO appointment Today’s news comes just days after a key leadership appointment: earlier this week, Kinetiko also announced long-standing CEO John Visage’s successor. Nick de Blocq is primed to take the reigns at the energy stock, bringing with him more than 33 years of experience global oil & gas exploration and production industry. The incoming chief executive has worked at major companies like Schlumberger, Frank’s International, SEPCO Industries and Moz Environmental. Speaking to his appointment, de Blocq said: “The company has a terrific project and perfect opportunity to develop into a major onshore gas producer and is poised on the cusp of becoming a substantial source of high-quality gas to help alleviate the national energy shortage. “I am looking forward to working with some of the best geophysical and operational solutions providers on the continent as we realise this potential.” Kinetiko’s strategy Kinetiko is the largest continuous landholder in the heart of South Africa’s Permian Age Coal Fields, with a project area that spans 7,000 square kilometres and 4,604 square kilometres worth of granted exploration rights. The extensive holding affords the company access to critical energy, mining and transport infrastructure as it prepares the Amersfoort Project to enter production. A 2018 gas flow testing study, conducted by an independent contractor, proved Amersfoort had a 95% gas recovery rate, with low levels of groundwater produced. The flow test also indicated Kinetiko might be able to eliminate the gas treatment step due to the high-quality nature of the project’s gas, with further evidence of strong gas reservoir recharge over time. Overall, Amersfoort boasts significant exploration upside, with only 15% of the asset’s total land package explored to date.