Kinetiko Energy Ltd (ASX:KKO, OTC:KKOEF) has delivered a number of important milestones in 2023 as it continues to advance gas exploration across its 6,000 square kilometre acreage in South Africa.
Executive chairman Adam Sierakowski reported on a year of considerable progress and achievements in his letter to shareholders.
The year began with positive news when Kinetiko announced the highest-ever gas desorption results from its Majuba core well 271-23C, which has resulted in the company planning to drill an adjacent appraisal production well in the first half of 2024 to establish the potential to supply substantial gas volumes to the nearby Majuba power station.
Significant further exploration progress occurred in the subsequent months and throughout the year with three successful core wells drilled in the Southern ER270 and then six equally successful core wells in Northern ER272, with the year finishing with further gas intersections in two core wells in ER270.
Kinetiko’s drilling operations which were safe and incident free through the year yielded meaningful results, underscoring the potential for large-scale production as it proved gas bearing pay zones in Northern and Southern areas of the company’s tenure.
This exploration success has underpinned the company’s strategy to deliver five appraisal production wells next year in the most prospective geology to establish viability of multiple large-scale gas field developments.
Furthermore, the Industrial Development Corporation of South Africa (IDC) demonstrated its confidence in Kinetiko’s projects, advancing substantial funds towards its joint venture with Afro Energy.
This joint venture aims to develop a pilot production gas field of approximately 20 production wells and has the potential of producing first gas sales later next year.
Kinetiko also solidified its strategic relationship with the IDC by executing a non-binding term sheet to develop South Africa’s largest onshore gas project.
The joint venture intends that the parties codevelop the appraisal and production of 50MW growing to 500MW gas equivalent energy.
In August, Kinetiko achieved a maiden certification of independent gas reserves and a 20%+ increase in 2C Contingent Resource to over 6.0 TCF from Sproule B.V. with the expectation for potential significant further upgrades to gas resources and reserves from adjacent application exploration right (ER 320) being granted and the success of appraisal production drilling, both being the focus of completion in 2024.
The restructuring of Afro Energy has now been completed and Kinetiko now holds 100% interest in Afro Energy the holder of all exploration rights in South African.
The merger unlocked significant value by de-risking the project and providing operational, funding and development efficiencies.
Read: Kinetiko Energy holds 100% of South Africa’s Afro Energy on acquiring remaining 51%
The company closed the year with strategic changes in its board.
In particular, the appointment of highly credentialed Robert Scharnell as a non-executive director has enhanced Kinetiko’s leadership structure and sharpened the company’s focus towards achieving commercialisation objectives.
Read: Kinetiko Energy taps 30-year oil and gas veteran as non-executive director to accelerate commercialisation