Last checked at 30 Oct 2018 07:00
30 October 2018
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTER ENDING 30 SEPTEMBER 2018
Tlou Energy Limited, the ASX, AIM and BSE listed company focused on delivering power in Botswana and southern Africa through the development of coal bed methane ('CBM'), is pleased to provide its operational report in respect to its Lesedi and Mamba CBM Projects in Botswana for the quarter ended 30 September 2018.
Highlights
· Tlou was invited to re-tender for the development of CBM fuelled pilot power plants in Botswana, with a proposal summited post quarter end.
· Well locations chosen and preparatory work completed in advance of pilot well drilling at the Lesedi CBM project, with the first well spudded in October 2018.
Lesedi CBM Project Area, Botswana
Licences: Mining Licence 2017/18L, Prospecting Licences 001 & 003/2004 and 35 & 37/2000
Ownership: Tlou Energy Limited 100%
The Lesedi project in Botswana covers an area of approximately 3,800 km2 and consists of four Coal and CBM Prospecting Licences (PL) and a Mining Licence. The Mining Licence area is currently the focal point for the Company's operations and includes the Selemo pilot project where the Company commenced gas production in 2016. The drilling of additional pilot production wells in the area is in progress.
The status of the Lesedi area licences is as follows:
Licence | Expiry | Status |
Mining Licence 2017/18L | August 2042 | Current |
PL 001/2004 | March 2019 | Current |
PL 003/2004 | March 2019 | Current |
PL 035/2000 | September 2018 | Awaiting Renewal confirmation (Expected in Nov-2018) |
PL 037/2000 | September 2018 | Awaiting Renewal confirmation (Expected in Nov-2018) |
Mamba Project Area, Botswana
Licences: Prospecting Licences 237-241/2014
Ownership: Tlou Energy Limited 100%
The Mamba project consists of five Coal and CBM PL's in Botswana covering an area of approximately 4,500 km2. The Mamba area is considered to be highly prospective being situated adjacent to Tlou's Lesedi CBM Project and being on-trend with the encouraging results observed to date. In the event of a gas field development by Tlou, the Mamba area provides the Company with considerable flexibility and optionality.
The status of the Mamba area licences is as follows:
Licence | Expiry | Status |
PL 237/2014 | September 2019 | Current |
PL 238/2014 | September 2019 | Current |
PL 239/2014 | September 2019 | Current |
PL 240/2014 | September 2019 | Current |
PL 241/2014 | September 2019 | Current |
Re-tender for the development of CBM fuelled Pilot Power Plants in Botswana
Earlier this year the Company was invited by Botswana's Ministry of Mineral Resources Green Technology and Energy Security ('the Ministry') to submit a response under a Request for Proposal (RFP) for Development of CBM fuelled power plants in Botswana as an Independent Power Producer (IPP).
This proposal is for the development of CBM fuelled power plants up to 100MW. A successful RFP process can assist in the development of a new CBM gas industry in the country and create a new market for Tlou's independently-certified gas reserves of ~41 billion cubic feet (2P), ~427 billion cubic feet (3P) and significant contingent gas resources of ~3 trillion cubic feet (3C).
As part of the re-tender process Tlou was invited to attend a pre-tender meeting with representatives of the Ministry on 9 August 2018. Tlou's team attended the meeting and was encouraged by the responses it received from the representatives of the Ministry. The RFP submission will be assessed based on eligibility, technical and funding criteria.
The closing date for submission of a response was originally set for 12 September 2018 and later extended to 10 October 2018, on which date the Company submitted its revised proposal.
The Company believes it has submitted a compelling and robust proposal. Tlou's submission outlined a staged development commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana. If the proposal and the initial project are successful, the Company would look to expand further.
Preparation and submission of documentation for the response to the government's request was a very intensive task. The submission has described Tlou's planned project in detail as well as outlining the significant benefits the project can bring to Botswana both directly and indirectly.
If Tlou's proposal is successful, this will provide an ideal pathway towards a power purchase agreement. Once an initial development is completed, Tlou Energy's gas field will be connected to the regional grid, thereby opening the possibility for the Company to provide power across the region, via the Southern African Power Pool.
Pilot well drilling program
Post the quarter end the Company commenced drilling of pilot production wells at its gas field in Botswana. If successful, these wells will form part of the Company's initial gas-to-power project which will include installation of transmission lines and grid connection.
Work during the quarter included site clearing, construction of well-site facilities, as well as ensuring a nearby core-hole was adequately plugged and abandoned prior to spudding of the first well. To maximise efficiencies, the vertical production wells and top-hole sections of lateral wells will initially be drilled. The Company will provide further updates on the drilling program as it progresses over the coming months.
The production well drilling program is being conducted in accordance with health and safety requirements and are consistent with the Company's approved environmental impact statement. There are various stages to the program including:
Ø Selection of well locations, site clearing and preparation | § Complete |
Ø Mobilisation of equipment and ordering of long lead items | § Complete |
Ø Engagement of relevant contractors (drilling supervisors, directional drilling staff, engineers) | § Complete |
Ø Field camp preparation | § Complete |
Ø Drilling of top-hole (vertical) section of wells | § In Progress |
Ø Lateral well directional drilling and intersection with production well | § Yet to commence |
Ø Completion of wells including installation of well-head equipment | § Yet to commence |
Ø Pressure testing, dewatering | § Yet to commence |
Ø Gas production, analysis and testing | § Yet to commence |
The wells will be drilled as 'dual lateral pods', comprising of a single vertical production well, intersected by two lateral wells. This will be followed by production testing with the potential to ultimately convert a significant portion of the currently established gas Resources to Reserves and to deliver gas to a proposed central processing facility and power station located in close proximity.
Once drilled, the wells will then be completed using a separate workover rig and surface facilities installed. The wells are expected to commence production testing in early 2019, commencing with dewatering the wells and lowering the pressure in the coal seam to achieve gas flow.
The project will require connection to the local power grid. This connection is planned to be made at the town of Serowe, approximately 100 Km from the Lesedi CBM project. A draft transmission line route has been determined with negotiations ongoing with the regional and local land boards and the environmental impact assessment approval process continuing.
Corporate
Shares issued
During the quarter Tlou Energy Limited completed the quotation of all shares following a Non-Renounceable Entitlement Offer ("Entitlement Offer") announced on 6 June 2018 and placement of shares not subscribed for under the Entitlement Offer.
Following admission of the Shares, the total number of voting rights of the Company's ordinary shares is 409,113,535. This figure of 409,113,535 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company. At the end of the quarter, the Company had a cash balance of AUD ~$9.1 million.
Other
In addition to selling power through the RFP process, should that be successful, the Company is also in discussions with groups in Europe and China with interests in developing Compressed Natural Gas or mini-LNG facilities as well as investigating the potential for the development of a fertilizer plant using Tlou's gas. These discussions are at an early stage and the Company will provide updates should these discussions progress further.
The Company's priorities remain to:
· secure a clear pathway towards a gas-to-power pilot project Power Purchase Agreement in Botswana;
· Connect to the power grid in Botswana which facilitates access to the Southern African Power Pool;
· Further de-risk the Lesedi project through the drilling of dual lateral pods in the Company's mining licence area to prove up additional gas reserves and enhance commercial gas flow rates;
· Expand the Company's reserves and contingent resources footprint through further core-hole drilling, core-sample analysis, and seismic surveys subject to funding.
In addition, the company will continue to progress other options including:
· Offtake opportunities both within and outside Botswana to service the enormous regional gas and power demand;
· Investigating possibilities for the Company to expand into other countries.
Anthony Gilby
Managing Director
Tlou Energy Limited
Website: www.tlouenergy.com
****
For further information regarding this announcement please contact:
Tlou Energy Limited | +61 7 3012 9793 |
Tony Gilby, Managing Director | |
Solomon Rowland, General Manager | |
Grant Thornton (Nominated Adviser) | +44 (0)20 7383 5100 |
Samantha Harrison, Colin Aaronson, Harrison Clarke | |
Shore Capital (Broker) | +44 (0) 207 408 4090 |
Jerry Keen, Toby Gibbs, Mark Percy | |
FlowComms Limited (Investor Relations) | +44 (0) 7891 677 441 |
Sasha Sethi |
Company Information
Tlou Energy is focused on delivering Gas-to-Power solutions in Botswana and southern Africa to alleviate some of the chronic power shortage in the region. Tlou is developing projects using coal bed methane ("CBM") natural gas. Botswana has a significant energy shortage and generally relies on expensive imported power and diesel generation to fulfil its power requirements. As 100% owner of the most advanced gas project in the country, the Lesedi CBM Project, Tlou Energy provides investors with access to a compelling opportunity using domestic gas to produce power and displace expensive diesel and imported power.
The Company is listed on the Australian Securities Exchange, London's AIM market and the Botswana Stock Exchange and is led by an experienced Board, management and advisory team including individuals with successful track records in the CBM industry.
Since establishment, the Company has significantly de-risked the project in consideration of its goal to become a significant gas-to-power producer. The Company flared its first gas in 2014, holds a Mining Licence and nine Prospecting Licences, covering an area of ~8,300Km2 in total. The Lesedi and Mamba Projects already benefits from significant independently certified Contingent Gas Resources of ~3 trillion cubic feet (3C) and independently certified Gas Reserves of 41 billion cubic feet (2C) ~426 billion cubic feet (3P).
The Company is planning an initial scalable gas-to-power project. Following successful implementation of this first scalable project, the Company looks forward to evaluating longer-term prospects for the delivery of electricity generated from CBM in Botswana to neighbouring countries.
+Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity | ||
Tlou Energy Limited | ||
ABN | Quarter ended ("current quarter") | |
79 136 739 967 | 30 September 2018 | |
Consolidated statement of cash flows | Current quarter $A'000 | Year to date (3 months)$A'000 | ||
1. | Cash flows from operating activities | |||
1.1 | Receipts from customers | |||
1.2 | Payments for | (688) | (688) | |
(a) exploration & evaluation | ||||
(b) development | (27) | (27) | ||
(c) production | ||||
(d) staff costs | (469) | (469) | ||
(e) administration and corporate costs | (352) | (352) | ||
1.3 | Dividends received (see note 3) | |||
1.4 | Interest received | 3 | 3 | |
1.5 | Interest and other costs of finance paid | |||
1.6 | Income taxes paid | |||
1.7 | Research and development refunds | |||
1.8 | Other | |||
1.9 | Net cash from / (used in) operating activities | (1,533) | (1,533) | |
2. | Cash flows from investing activities | (1,169) | (1,169) | |
2.1 | Payments to acquire: | |||
(a) property, plant and equipment | ||||
(b) tenements (see item 10) | ||||
(c) investments | ||||
(d) other non-current assets | ||||
2.2 | Proceeds from the disposal of: | |||
(a) property, plant and equipment | ||||
(b) tenements (see item 10) | ||||
(c) investments | ||||
(d) other non-current assets | ||||
2.3 | Cash flows from loans to other entities | |||
2.4 | Dividends received (see note 3) | |||
2.5 | Other (provide details if material) | |||
2.6 | Net cash from / (used in) investing activities | (1,169) | (1,169) | |
3. | Cash flows from financing activities | 5,078 | 5,078 | |
3.1 | Proceeds from issues of shares | |||
3.2 | Proceeds from issue of convertible notes | |||
3.3 | Proceeds from exercise of share options | |||
3.4 | Transaction costs related to issues of shares, convertible notes or options | (260) | (260) | |
3.5 | Proceeds from borrowings | |||
3.6 | Repayment of borrowings | |||
3.7 | Transaction costs related to loans and borrowings | |||
3.8 | Dividends paid | |||
3.9 | Other (provide details if material) | |||
3.10 | Net cash from / (used in) financing activities | 4,818 | 4,818 | |
4. | Net increase / (decrease) in cash and cash equivalents for the period | 7,019 | 7,019 | |
4.1 | Cash and cash equivalents at beginning of period | |||
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (1,533) | (1,533) | |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (1,169) | (1,169) | |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 4,818 | 4,818 | |
4.5 | Effect of movement in exchange rates on cash held | (31) | (31) | |
4.6 | Cash and cash equivalents at end of period | 9,104 | 9,104 | |
5. | Reconciliation of cash and cash equivalentsat the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts | Current quarter$A'000 | Previous quarter$A'000 |
5.1 | Bank balances | 9,104 | 7,019 |
5.2 | Call deposits | ||
5.3 | Bank overdrafts | ||
5.4 | Other (provide details) | ||
5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 9,104 | 7,019 |
6. | Payments to directors of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to these parties included in item 1.2 | 304 |
6.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | |
6.3 | Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 | |
Office rent, Directors fees and salaries
| ||
7. | Payments to related entities of the entity and their associates | Current quarter$A'000 |
7.1 | Aggregate amount of payments to these parties included in item 1.2 | |
7.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | |
7.3 | Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2 | |
| ||
8. | Financing facilities availableAdd notes as necessary for an understanding of the position | Total facility amount at quarter end$A'000 | Amount drawn at quarter end$A'000 |
8.1 | Loan facilities | ||
8.2 | Credit standby arrangements | ||
8.3 | Other (please specify) | ||
8.4 | Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. | ||
| |||
9. | Estimated cash outflows for next quarter | $A'000 |
9.1 | Exploration and evaluation | 4,194 |
9.2 | Development | |
9.3 | Production | |
9.4 | Staff costs | 355 |
9.5 | Administration and corporate costs | 384 |
9.6 | Other (Equipment) | 418 |
9.7 | Total estimated cash outflows | 5,351 |
10. | Changes in tenements(items 2.1(b) and 2.2(b) above) | Tenement reference and location | Nature of interest | Interest at beginning of quarter | Interest at end of quarter |
10.1 | Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced | ||||
10.2 | Interests in mining tenements and petroleum tenements acquired or increased |
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: ....Solomon Rowland.................. Date: .....30 October 2018.....
(Director/Company secretary)
Print name: ......Solomon Rowland................
Notes
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.