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LONDON (Alliance News) - Tlou Energy Ltd shares rose on Thursday after it said gas production testing has started at the Selemo-1 pilot well at the Lesedi coalbed methane project in Botswana, and said the initial results are "very encouraging".
Tlou shares were up 29% to 4.85 pence per share on Thursday morning.
Tlou, which joined AIM in November last year, has started testing the Selemo-1 pilot well in the hope it can prove a sustainable and commercial rate of production is achievable at the project.
If Tlou is successful, the company will have developed the first commercial flow of gas in the country, it said.
The initial results from the well are "very encouraging" after establishing extended periods of consistent gas flow. Tlou said results are currently in line with expectations and it expects to achieve a sustainable flow of gas "imminently."
The two wells that lie either side of Selemo-1 are shielding water from the producing well, and Tlou said it is reducing the pressure in the well in increments and changing the lateral wellhead pressure, which suggests gas production rates will continue to increase.
Importantly, Tlou has already carried out gas production tests on Selemo-1 last year but only managed to get gas flowing for a short period of time. However, that was before the company drilled the two wells that now shield Selemo-1.
The data, once collected, will be incorporated into the company's field development plan for Lesedi, as the company continues to progress offtake agreements and moves toward securing its first independent gas reserve certificate in Botswana.
"We expect to announce a series of updates in the coming weeks which will provide the key data required to book independently certified reserves, thereby de-risking the project further. Moreover, this data will provide further confidence to strategic off-takers whom we are currently in advanced discussions with regard to gas supplies," said Gabaake Gaabake, acting managing director of the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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