Serowe Coal Bed Methane (CBM)- Botswana

Features of Serowe CBM Project – Republic of Botswana

  • 19B-1 well exceeded underlying coal resource assumptions, bright coals with free gas confirmed.
    • 6.08Tcf total Prospective Resources net to the Company, an increase of 83%.(1)
    • 2.38Tcf Prospective Resource within the Company’s interpreted high-grade area, an increase of 40%.(1)
    • Maiden 23Bcf  2C Contingent Resource, net to the Company, around Strata-X’s recent 19B-1 well. (1)
    • MHA Petroleum Consultants, independent qualified reserve and resource certifiers, have certified the following gas resources within Strata-X’s 100% owned Serowe CBM Project in Botswana.
  • Serowe CBM Project is a 100% owned 1,129,000 acre (4,572 KM2) coal seam gas Project.
  • Active 2019 appraisal programme planned, located in the heart of the Kalahari CBM Fairway.

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.

The Serowe CBM Project is located in the Kalahari Basin CBM fairway in Botswana Africa, and adjoins tenements of ASX peers.  The Company’s Serowe CBM land holdings consist of two sets of acquisitions. The first being 273,000 acres of tenements acquired in a 2016 3rd party transaction and the second being 856,000 acres of tenements directly secured by the Company from the Republic of Botswana, Department of Mines. In total, the Serowe CBM Project spans 1,129,000 acres in the heart of the Kalahari CBM Fairway with all tenements primary exploration terms extending to 2025 and in perpetuity when commercial production is established. Strata-X currently holds the tenements through its Republic of Botswana subsidiaries, Sharpay Enterprises Pty Ltd. and Jab Right Pty Ltd. Of the Serowe CBM Project holdings, 330,000 acres (1,475sq. km) are located within the Company’s interpreted CBM high-grade area.

The Company submitted an Environmental Management Plan (“EMP”) over the 2016 acquired tenements totaling 273,000 acres in compliance with Republic of Botswana regulations. The EMP was subsequently approved allowing for up to 20 CBM wells to be placed on production testing. The EMP allows the Company to delineate the CBM resource over the subject tenements during the ‘exploration’ term extending to 2025.  At any time during the ‘exploration’ term, Strata-X can convert the tenement to a ‘development’ period, thereby allowing development in perpetuity and removing the cap on the allowed number of wells. 

Following an internal detailed mapping of proprietary and public information in 2018, the Company identified a high-grade area within the Kalahari Coal Bed Methane Fairway of Central Botswana. The identified high-grade area is interpreted to have all the necessary attributes for commercial CBM from inexpensive vertical well completions. Within this area, previously drilled wells flowed or bubbled free gas from the Strata-X targeted coal reservoir. This is important because only 100% gas saturated reservoirs can flow free gas.

To test the high-grade area, the Company located the 19B-1 well within the mapped high grade area and adjacent to a fully-cored well that was drilled in 2003 by the Government of Botswana. The fully-cored well had intersected bright coals and gas saturations up to 100% were present.

In March 2019, the 19B-1 well reached total depth of 474 metres and was successfully logged to total depth using  conventional and state-of-the-art Borehole Magnetic Resonance (BMR) wireline tools, The results of the 19B-1 well exceeded Company expectations.

The data from the 19B-1 wireline logs, together with the Company's interpretation of that data, reflect the following:

  • Over the interval between 404 and 464 metres, 18 metres of net gassy coal with 12 metres of bright coal showing gas saturations up to 100% were present. The logged bright coal intervals are 37% thicker than those in the nearby core well.
  • Gas contents range between 2.2 and 5.81 cubic metres per tonne. The lowest gas content was observed in the shallowest dull coal seam at 404 metres and is consistent with the results from the nearby core well. The highest gas content observed was in coal seams at 463 metres and is 30% higher than gas contents in the nearby core well.
  • Over the interval between 415 and 427 metres, interbedded coal and carbonaceous shales were encountered including five permeable coal seams with up to 100 milldarcies of CBM permeability. Three of these zones were interpreted and observed to have free gas – which infers gas saturations of 100%.
  • Free gas was also present in the coal seam at 463 metres.

Having drilled the 19B-1 well, Strata-X is now working with its independent certifiers to update Company resources over the Serowe CSG Project with the target of securing a resource upgrade in the 2nd calendar quarter of 2019. It is the goal of the Company to rapidly and systematically convert gas resources to reserves over the Serowe CBM Project.  The primary precursor for defining reserves is to prove commercial gas flow rates with a CBM production pilot programme.

An active mid-year appraisal programme is currently being planned utilizing the best-practices learned in the 19B-1 operations. The multi-well programme, which details of which  are forthcoming, is expected to include the production testing of wells to acquire flow rate data as required to expand to a multi-well production pilot program.

For the proposed CBM pilot programme, the Company plans to apply the latest completion and production methods designed to yield commercial gas flow rates. The Company has access to the resources of Wellpro Services, a private Queensland-based service company with expertise in CBM well completions and production methods. Wellpro has proprietary methods and equipment designed to minimize the time to commercial gas flow rates which the Company intends to apply to the target coal seam within the high-graded area. 

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 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.

(1) Prospective and Contingent Resources figures are from an audit report prepared by Timothy Hower of MHA Petroleum Consultants, a qualified independent reserves auditor, dated and effective 10 May 2019 following MHA's audit in accordance with the COGE Handbook of the available technical data including the geological interpretation, information from relevant nearby wells, Company drilled wells, analogous reservoirs and the proposed program for the Project, prepared and presented to MHA by Strata-X. Tim Hower is a member of the Society of Petroleum Engineers and has consented to the resources estimates in the context they appear. Stated Prospective and Contingent Resources are based on, and fairly represents, information and supporting documentation prepared and/or audited by, or under the supervision of Timothy Hower. Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development project. Prospective Resources have both an associated chance of discovery and a chance of development. A high level of uncertainty exists with the Prospective resources given the lack of historical drilling, available data and other productivity factors that limit the economic viability of coal seam gas deposits. The reports Prospective and Contingent Resources are over Prospecting Licenses Strata-X holds for methane production the Republic of Botswana. Actual sales from the Prospecting License cannot begin until converted by Strata-X election and environmental filings to the Republic of Botswana. Stated Prospective Resource figures are Best Estimate estimated using deterministic method - unrisked, undiscovered natural gas quantities and net of a royalty and are shown at a 100% working interest in the Project and are derived from coal characterization data from the 19B-1 well comprised of 10 net metre of coal, gas saturation yields of 120 cubic feet per ton, coal density of 1.7g/cm and using a 75% recovery factor. Stated Contingent Resource figures are Best Estimate - natural gas quantities and net of a royalty and are shown at a 100% working interest in the Project and are derived from coal characterization data from the 19B-1 well comprised of 10 net metre of coal, gas saturation yields of 120 cubic feet per ton, coal density of 1.7g/cm and using a 75% recovery factor. Contingent Resources stated are estimated using low, best and high analytical inputs, using deterministic method. Contingent Resources were extrapolated over an area of 15km2 using the coal characterization of the 19B-1 well which area assumes consistent coal characterization as seen in the 19B-1 well over this area. Contingent Resources stated are prevented from being reserves until sufficient production tests are carried out and to date these tests have not been carried out. The total costs associated with establishing the commerciality of this project are unknown at this time given the early stage of the Project's development. There is no certainty that any portion of the Prospective Resources will be discovered, if discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. The 19B-1 well is located at Long22.9541/Lat- 22.1804 and the fully cored historical Botswana government well named ML-1 is located at Long 25.9299/Lat-22.1793.