Serowe Coal Seam Gas (CSG)- Botswana

Features of Serowe CSG Project – Republic of Botswana

  • Serowe CSG 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 CSG Fairway.
  • Strata-X has substantial land holdings within the internally mapped high-graded area. 
  • MHA Petroleum Consultants have calculated a Prospective Resources of 3.3 TCF (Trillion Cubic Feet) net to Strata-X over the Serowe CSG Prospect. (1)
  • Ample tenement term to establish production; tenement active into 2025.

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 project is located in the Kalahari Basin CSG fairway, and offsets tenements of ASX peer TLOU (ASX:TOU).  As announced on 2 January 2018, the Company pre-empted a third party offer to buy a 25% interest in those licenses totaling 273,000 acres with a 1.4Tcf Prospective Resource(1) and on March 6, 2018 the preempt transaction was closed. As of the issuance of this report, all payments related to the buy out have been made.

The Serowe CSG Project is located in the Kalahari Basin CSG fairway in Botswana Africa, and adjoins tenements of ASX peers.  The Company’s Serowe CSG 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 CSG Project spans 1,129,000 acres in the heart of the Kalahari CSG 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.

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 CSG wells to be placed on production. The EMP allows the Company to delineate the CSG 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 ‘production’ period, thereby allowing development in perpetuity and removing the cap on the allowed number of wells. 

For 2019, the Company has entered into a turnkey contract with Danos Drilling of Gabarone, Botswana for 1 firm plus one optional vertical well on the Serowe CSG Project. Following the Company’s internal interpretation of historical coal and CSG drilling in Botswana last year, Strata-X focused on the upper stratigraphic section within a high-graded area of the Botswana CSG Fairway. The stratigraphic section has bright and gas saturated coals that are interpreted to be highly prospective for commercial CSG. The Company holds 100% equity in approximately 320,000 acres (1,295 sq km) within the interpreted high-graded area.

SXE 19B-1 will be the first vertical well to be drilled and flow tested within the high-graded area and is located adjacent to (~ 2.5 km from) a fully cored well. The cored well was drilled in 2003 by the Government of Botswana and intersected about 8 metres of bright coals with gas saturations up to 100%.  The SXE 19B-1 well will be drilled to a depth of approximately 490 metres and is located in Strata-X’s 100% owned Prospecting License (PL) 19-B.

The operations plan is to case and suspend the SXE 19B-1 well for long term production testing. If the results of SXE 19B-1 are sufficiently positive, the Company may consider expanding the drilling program to a pilot program and include the optional second well in that pilot. The Company selected Mr. Adam Scott to direct the CSG wellsite evaluation for the drilling program.  Mr. Scott has a long career in CSG exploration and appraisal with Arrow Energy, Sino Gas and Energy, Origin Energy and other companies and is a highly regarded expert in CSG evaluation. Mr. Scott will be on location directing the evaluation of the coals, gas measurements and flow tests.

To further complement the high-graded area appraisal, 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 CSG 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 Company also intends to use the services of QTEQ, a service company that has recently developed specialized wireline logging, to help fast track reserve certification.

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.

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.