Projects Overview

Botswana

Kalahari Basin:
Serowe CSG Project

United States

Illinois Basin, Illinois:
Overview
Unconventional Horizontal
Vertical

San Joaquin Basin, California:
Eagle Oil Project

Serowe Coal Seam Gas (CSG)- Botswana

Highlights - Serowe CSG Project Farmin

  • Active 2018 exploration programme planned.
  • Post pre-emption closing, Strata-X will own 100% of the Serowe Gas Project in the Kalahari Basin CSG fairway in Botswana, Africa.
  • Strata-X will operate the Project covering two licenses spanning 273,000 acres.
  • The Project has a mean estimate of 1.4 Tcf (post pre-emption) prospective resource net to Strata-X’s interest. (1)
  • There are immediate and expanding domestic gas markets in southern Africa.
  • Botswana rated as an attractive investment destination.

ASX disclosure note - 5.28.2 - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

In November 2016, SXE executed a Farm-in Agreement with Magnum Gas and Power (ASX:MPE) for a staged farm-in to earn up to 75% of the Serowe Gas Project located on the Kalahari Basin CSG Fairway in Botswana, Africa.  As announced on 2 January 2018, the Company has pre-empted a third party offer to buy out MPE’s 25% interest in the 273,000 acre, 1.4Tcf Prospective Resource(1), Serowe Gas Project (“Serowe”). Strata-X elected to pre-empt the offer as its gives the Company flexibility in developing the resources outside of a restrictive farm-in agreement and grants the Company greater optionality to use the value in the Serowe tenement in lieu of shareholder dilution. The Serowe project is located in the Kalahari Basin CSG fairway, and offsets tenements of ASX peer TLOU (ASX:TOU).  Strata-X currently holds the tenements through its Republic of Botswana subsidiary, Rhino CBM PTY LTD.

The Company expects the final pre-emption agreements will to be executed by the end of the first quarter of 2018. During this time, the Company will initiate environmental surveys to complete an Environmental Management Plan (“EMP”) for its 2018-2019 drilling and testing programme. Upon concluding the EMP, the Company will move forward with an active drilling and testing programme.

To offset pre-emption costs of buying-out MPE, Strata-X is actively engaged in farm-out discussions with third parties to sell a non-operated position in the tenements which should defray the cost of pre-empting and a portion of the 2018 exploration programme. Any arrangements that the Company enters will preserve its rights to develop the resource as operator, granting Strata-X the ability to control timing and development methods.

The pre-emption offer made by Strata-X will be subject to similar terms and conditions as that made by the third party seeking MPE’s 25% interest in Rhino CBM PTY LTD. The agreement will call for an immediate deposit of AUD$25,000 to MPE along with execution of the formal Purchase and Sale Agreement (“PSA”) by the end of February 2018. Upon execution of a PSA and Strata-X’s satisfaction of several closing conditions, Strata-X will pay MPE AUD$125,000 in cash and grant a 3.5% overriding royalty interest in the tenements net to MPE’s 25% bought out ownership. Thereafter, Strata-X will deliver to MPE, AUD$200,000 within 60 days of closing the PSA along with another AUD$200,000 within 135 days of closing the PSA. The PSA, which has yet to be drafted, will include customary warranties, covenants, terms, and conditions.

The Republic of Botswana is one of the oldest democracies in Africa, becoming independent in 1966. The rule of law is well established and long-standing, and Botswana is recognized as having the lowest rate of corruption in Africa. The geography of the project area is predominantly flat with good road access. These factors, combined with a 3% government royalty (there is also a 3% private royalty payable to parties associated with MPE) on produced gas, make Botswana one of the more favorable economic settings in the world for natural resource development. The growing demand for power in Botswana and neighboring countries offers immediate and expanding domestic gas markets.

The Serowe Gas Project is an underexplored and underdeveloped opportunity, covering the coal seam gas deposit fairway in the Republic of Botswana. The economies of the Republic of Botswana and its regional neighbors are rapidly growing with energy demand poised to skyrocket. The Republic has set goals for promoting the exploration and development of natural gas resources in the county to meet these demands.

(1) Prospective Resources figures are from an audit report prepared by MHA Petroleum Consultant dated 26 October 2016 following their audit of the available technical data including the geological interpretation, information from relevant nearby wells, analogous reservoirs and the proposed program for the Project, prepared and presented to MHA by Strata-X. Stated Prospective Resource figures are Best Estimate – undiscovered natural gas quantities and net of a 9% royalty and are shown at a 100% working interest in the Project that Strata-X will only earn upon completing the farm-in program. For addition information see Strata-X November 2016 Presentation.