(Alliance News) - Tlou Energy Ltd on Monday said gas production from testing of wells in Botswana has been inconsistent, while also cautioning on when commercial production can be achieved.
Shares were 14% lower on Monday morning in London at 4.10 pence each.
The two pods at Lesedi, Lesedi 3 and Lesedi 4, are currently being tested with the hope that one or both of them can be moved onto commercial production.
Brisbane-based Tlou previously had announced initial gas flow of 20,000 cubic feet per day, with Tlou aiming for between 80,000 to 100,000 cubic feet from each site.
"Since the initial rate announcement, gas flow rates have continued to fluctuate both up and down with periodic short-term rates observed which have been much higher than those initially announced. The company will not be in a position to announce an increased rate until such time that higher levels are sustained and confirmed by our advisors," said Tlou on Monday.
Tlou said it may not even be possible to achieve commercial production, given no gas production has taken place in the region before, so the company has nothing with which to compare Lesedi. However, based on performance, Tlou said it "has no reason to believe the targeted commercial gas flow rates will not be achieved".
The process also is taking more time because of Tlou's funding position. A shortage of cash means it is being cautious to ensure no damage to either pod.
Water is being produced in isolation, Tlou continued, which makes dewatering the pods more difficult and time consuming than normal.
Tlou is continuing talks with the Botswana government's Botswana Development Corp, and it is also in talks with other funding sources.
Elsewhere, Tlou has asked the government for an initial power purchase agreement with the country, ahead of a full agreement. This, it said, is to prevent further delays and allow the company to secure funding.
By George Collard; georgecollard@alliancenews.com
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Tlou Energy (TLOU)