Last checked at 31 Jan 2017 07:00
31 January 2017
Tlou Energy Limited
("Tlou" or "the Company")
OPERATIONAL REPORT - QUARTER ENDING 31 DECEMBER 2016
Tlou, the AIM and ASX 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 Project in Botswana for the quarter ended 31 December 2016.
Highlights
· Significant commercial milestones reached towards delivery of a CBM power project in Botswana:
o Became the first company in Botswana to achieve independently certified CBM gas reserves
o Received a detailed Request for Proposal from the Government of Botswana to develop up to 100MW of CBM power in Botswana on a staged basis post period end
o Extension of Cooperation Agreement with General Electric International Inc. and IK Holdings Pty Ltd - provides framework for co-operation in relation to sharing infrastructure and support for the project's delivery
o Engaged a specialist African based firm to provide recommendations for the design and installation of the transmission lines to connect to the local power grid
· Commencement of work with SRK to deliver future exploration work programs
TLOU ENERGY LIMITED PROJECTS
Lesedi CBM Project Area, Botswana
PLs 001-003/2004 and PLs 35 & 37/2000
Tlou Energy Limited 100%
The Lesedi project consists of five CBM prospecting licences in Botswana covering an area of approximately 3,800km2. These licences are currently the focal point for the Company's operations, in particular PL 002/2004, where a substantial amount of exploration and evaluation has been conducted over recent years. Two of the licences were renewed for a further two years at the beginning of the quarter, with a renewal application submitted for the other three licences in December 2016.
Prospecting Licence | Expiry | Status |
PL 001/2004 | March 2017 | Renewal application submitted - December 2016 |
PL 002/2004 | March 2017 | Renewal application submitted - December 2016 |
PL 003/2004 | March 2017 | Renewal application submitted - December 2016 |
PL 035/2000 | September 2018 | 2 Year renewal received - October 2016 |
PL 037/2000 | September 2018 | 2 Year renewal received - October 2016 |
Reserve Certification
Tlou Energy Limited became the first company in Botswana to achieve independently certified CBM gas reserves during the quarter, following certification from SRK Consulting (Australasia) Pty Ltd ("SRK") for the Lesedi CBM Project ("Lesedi") located in prospecting licence PL 002/2004 in Botswana.
The Company is focused on delivering power in Botswana and southern Africa through the development of CBM projects. Lesedi is the most advanced CBM project in Botswana and includes the gas producing Selemo production wells.
The three Selemo production wells, also referred to as pods, each consist of a vertical well and an intersecting horizontal well. Sustained gas rates have been flowing at the Selemo pilot project for some months with the data obtained from the production testing program at Selemo used by SRK in the reserve certification process.
Initial reserve certification is a major milestone and demonstrates the commerciality of the Lesedi CBM Project. The Company aims to continue to upgrade these reserves as further production data from Lesedi is collected.
In accordance with the Society of Petroleum Engineers ("SPE") 2007 Petroleum Resource Management System ("PRMS") Guidelines as well as the 2011 Guidelines for Application of the PRMS approved by the SPE, SRK have attributed Gas Reserves to Tlou's 100% interest in Lesedi using the deterministic method of petroleum reserves estimation as at 26 September 2016 as set out in Table 1 below (in billion cubic feet (BCF)). The below information should be read in conjunction with the Company's detailed announcement dated 12 October 2016.
Table 1: Lesedi Independent Gas Reserves Certification (Lower Morupule seam only) and Contingent Gas Resources Certification (all coal seams) - BCF
Tlou Interest (100%) | Gas Reserves (BCF) 1 | Contingent Gas Resources (BCF) 2 | ||||
Category | 1P | 2P | 3P | 1C | 2C | 3C |
26 September 2016certification by SRK | 0.1 | 2.7 | 52.9 | 4.8 | 236 | 3,243 |
31 March 2015certification by SRK | - | - | - | 4.9 | 239 | 3,296 |
Increase/(decrease) | 0.1 | 2.7 | 52.9 | (0.1) | (3) | (53) |
The change in Contingent Gas Resources is due to their partial conversion to Reserves and pilot gas production. SRK have also reported the Gas Reserves in Petajoules (PJ), as shown in Table 2 below.
Table 2: Lesedi Independent Gas Reserves Certification (Lower Morupule seam only) - BCF and PJ
Tlou Interest (100%) | Gas Reserves (BCF) 1 | Gas Reserves (PJ) 1, 3 | ||||
Category | 1P 2 | 2P | 3P | 1P | 2P | 3P |
26 September 2016certification by SRK | 0.1 | 2.7 | 52.9 | 0.1 | 2.1 | 42.2 |
Notes to Tables 1 and 2 above:
Gas Reserve numbers have been rounded to the nearest tenth. Gas Resource numbers have been rounded to the nearest tenth for amounts less than 100 BCF, otherwise to the nearest whole number. Refer to Competent Persons Statement in Appendix 2 of the Company's announcement on 12 October 2016.
1) Tlou's Gas Reserves have not been adjusted for fuel or shrinkage and have been calculated at the wellhead (which is the reference point for the purposes of Listing Rule 5.26.5) for the Lower Morupule seam only.
2) Contingent Gas Resources are (100%) Unrisked Gross and are derived from the SRK certification at 31 March 2015 for all coal seams (as previously announced by Tlou on 9 April 2015) with adjustment by Tlou for the gas volumes which have now been certified by SRK in the Gas Reserves category for the Lower Morupule seam.
3) The energy content of the gas was determined by SRK as 0.8 PJ per BCF for the Lower Morupule coal seam based on corehole gas composition in the Selemo pilot area.
SRK has consented to the information in this announcement being released.
Regional geological data and further field exploration
Tlou has an extensive geological database across much of its licence area particularly over the Lesedi project. As the Company progresses towards field development and further exploration, a key task is to assess the most prospective areas to base future projects. During the quarter, the Company engaged SRK to assist with this process due to their expertise in this area along with their in-depth knowledge of the project, having been involved in the booking of initial gas reserves as well as contingent resources prior to that.
Included in the scope of work is a review of the Company's geological model to make recommendations in relation to future work programs. This will incorporate potential field, seismic and drilling data, developing optimum production layouts including updating well performance simulation and defining further reserve certification work programs. The Company is considering expansion of its exploration work in the field at both the Lesedi and Mamba project areas held by the Company.
Gas to power project
As previously announced, Tlou has been approved by the Government of Botswana to develop a Gas to power project. Post quarter end the company announced that it received a detailed Request for Proposal ("RFP") from the Government of Botswana to develop up to 100MW of CBM power in Botswana. The gas to power project is planned to be delivered on a staged basis and can be divided into two distinct parts, upstream, and downstream development, with excellent progress being made in each of these areas.
For the upstream, this includes working with specialist engineers on the gas field development plan aimed at:
· developing the gas field to supply the initial 10MW phase of the project;
· determine capital, operating and maintenance costs; and
· providing a project execution plan to ensure the Company's objectives for the project can be achieved in the desired timeframes.
This downstream process comprises two parts, being the power generation units and transmission lines.
The planning, design, and development of the power generation units is well underway and the Company is being assisted by our co-operation partner GE, a world-leader in the design, construction, operation, and maintenance of power generation facilities. Further information on this co-operation agreement can be found below.
The Company has also engaged a specialist African based firm to provide recommendations for the design and installation of the transmission lines to connect to the local power grid in Botswana, including:
· determining the lowest cost and most effective integration point in the local grid for up to 100MW of power generation located at the Company's Lesedi project starting with an initial 10MW project within two years and ramping up thereafter;
· determining the most feasible route and cost of a transmission line for a 10MW, 50MW and 100MW project; and
· Assessing upgrades required in the BPC network at the integration point, if any, and the related costs.
Co-operation Agreement
Tlou extended a Co-operation Agreement during the quarter with General Electric International Inc. ('GE') and IK Holdings Pty Ltd ('IK Holdings') for the delivery of a proposed gas to power solution for Botswana. This agreement has been extended until 28 February 2017. The Agreement provides the framework for co-operation between the parties in relation to sharing infrastructure and technical support for the delivery of the 50MW power project; gas supply to the existing 90MW Orapa power station owned by Botswana Power Corporation; and a proposed 300MW gas-fired power project to be developed by IK Holdings and GE.
Various other parties have also expressed their interest in collaborating with Tlou for the initial gas to power project.
Mamba Project Area, Botswana
PLs 237-241/2014
Tlou Energy Limited 100%
The Mamba project consists of five CBM prospecting licences in Botswana covering an area of approximately 4,500km2. The Mamba area is considered to be highly prospective being situated adjacent to Tlou's Lesedi CBM Project and are on-trend with the encouraging results observed to date. Part of the work being conducted by SRK will focus on the Mamba permits. No operations were conducted in the tenement during the quarter. In the event of a gas field development by Tlou, the Mamba area provides the Company with considerable flexibility and optionality.
Licence | Expiry | Status |
PL 237/2014 | June 2017 | Current |
PL 238/2014 | June 2017 | Current |
PL 239/2014 | June 2017 | Current |
PL 240/2014 | June 2017 | Current |
PL 241/2014 | June 2017 | Current |
New Ventures
While Tlou is focussed on the Lesedi CBM project, the Company will continue looking at potential areas of expansion should the possibility arise.
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Tlou- Key Statistics (as at 31 December 2016)
· ASX Code - TOU
· AIM Code - TLOU
· Shares on issue ~ 237 million
· Fully diluted ~ 239 million
· Cash balance ~ $2.4 million (AUD)
· Debt - Nil
· Primary Focus is the Lesedi CBM Project in Botswana
Anthony Gilby
Managing Director
Tlou Energy Limited
Website: www.tlouenergy.com
For further information regarding this announcement please contact:
Tony Gilby, Managing Director Solomon Rowland, Company Secretary
Email: info@tlouenergy.com Email: info@tlouenergy.com
Company Information
Tlou Energy is an AIM and ASX listed company focused on delivering power in Botswana through the development of coal bed methane ('CBM') projects. Botswana has a severe energy shortage and is currently relying on expensive imported power and diesel generation to deliver its requirements. However, as the 100% owners of the most advanced gas project in the country, the Lesedi CBM Project, Tlou Energy provides investors with access to a compelling immediate and longer term opportunity using domestic gas to produce power and displace the expensive diesel and import market.
The Company is led by an experienced Board, management and advisory team including individuals with successful track records in the Australian CBM industry.
Since establishment in 2009 the Company has significantly de-risked the project in consideration of its goal to become a significant gas to power producer. The Company has the most advanced CBM project in Botswana and flared its first gas in 2014. It holds 10 prospecting licences covering an area of ~8,300Km2 and the Lesedi project already benefits from significant, independently certified contingent resources of ~3.2 trillion cubic feet (3C). In October 2016, the Company booked its maiden independently certified gas reserves, thereby becoming the first company in Botswana to do so.
The Company is planning an initial scalable gas-to-power project in Botswana. Following successful implementation of this first scalable project, the Company plans to expand in order to provide further power to Botswana and the southern African region.
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 | 31 December 2016 | |
Consolidated statement of cash flows | Current quarter $A'000 | Year to date (6 months)$A'000 | ||
1. | Cash flows from operating activities | |||
1.1 | Receipts from customers | |||
1.2 | Payments for | (498) | (916) | |
(a) exploration & evaluation | ||||
(b) development | ||||
(c) production | ||||
(d) staff costs | (205) | (433) | ||
(e) administration and corporate costs | (377) | (713) | ||
1.3 | Dividends received (see note 3) | |||
1.4 | Interest received | 1 | 1 | |
1.5 | Interest and other costs of finance paid | |||
1.6 | Income taxes paid | |||
1.7 | Research and development refunds | |||
1.8 | Other (provide details if material) | 28 | 48 | |
1.9 | Net cash from / (used in) operating activities | (1,051) | (2,013) | |
2. | Cash flows from investing activities | |||
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: | (4) | (4) | |
(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 | (4) | (4) | |
3. | Cash flows from financing activities | 254 | 3,254 | |
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 | (78) | ||
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 | 254 | 3,176 | |
4. | Net increase / (decrease) in cash and cash equivalents for the period | 3,264 | 1,224 | |
4.1 | Cash and cash equivalents at beginning of period | |||
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (1,051) | (2,013) | |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (4) | (4) | |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 254 | 3,176 | |
4.5 | Effect of movement in exchange rates on cash held | (53) | 27 | |
4.6 | Cash and cash equivalents at end of period | 2,410 | 2,410 | |
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 | 2,410 | 3,264 |
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) | 2,410 | 3,264 |
6. | Payments to directors of the entity and their associates | Current quarter$A'000 |
6.1 | Aggregate amount of payments to these parties included in item 1.2 | 109 |
6.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | |
6.3 | Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 | |
Office rent, Directors fees and salaries
| ||
7. | Payments to related entities of the entity and their associates | Current quarter$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 | 439 |
9.2 | Development | |
9.3 | Production | |
9.4 | Staff costs | 268 |
9.5 | Administration and corporate costs | 234 |
9.6 | Other (provide details if material) | |
9.7 | Total estimated cash outflows | 941 |
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: .....31 January 2017.....
(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.