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Thursday, March 5, 2020
Strata-X Energy has executed a Heads of Agreement with Botsgas, a private Australia based company with strong ties to the Republic of Botswana, to accelerate the appraisal and development of the Company’s Serowe CSG Project.
The executed Heads of Agreement allows for the drilling of one firm vertical well with staged options for an additional 18 vertical wells, which includes 6 additional appraisal wells and up to 3 production pilots designed to prove commercial gas flows and add material reserves. The Company will retain operational control of the project for the foreseeable future and expects to commence field operations early in the second quarter of 2020.
The main focus of the farm-out will be Strata-X’s high-grade area of the Botswana CBM Fairway. This area is interpreted to contain, on average, 10 meters net Serowe bright-coal seams over a 50-meter interval with high gas saturations up to 100%. A third party has certified 2.38 TCF prospective gas resource within Strata-X’s tenements in the high-grade area. This interpretation is re-enforced with the results of the Company’s 19B-1 well drilled in 2019 by Strata-X and a nearby historic core hole data, which bubbled free gas from the target bright-coals.
The 19B-1 well intersected 18 meters of net coal with 12 meters of multi seam bright coals having up to 100% gas saturations. After the drilling of 19B-1, anarea immediately surrounding the well was certified to contain 2C Contingent Resources of 23 Bcf of natural gas.
The first farm-out well under the Heads of Agreement is located about 4 km from 19-B-1. The well, called Botgas-19-B-2, will be drilled and cased to the top Serowe bright coals, then drilled 60 meters through the Serowe coals and under reamed over the Serowe coals open interval. Temporary flow test equipment will be used to carry out a short term continuous and controlled draw down test designed to determine water flows from the coals and induce gas breakout. Botsgas is required to fund the first well as a minimum program to an approved budget of up to US$300,000. If the cost of the initial well exceeds US$300,000, then Strata-X will be required to fund the costs in excess of that amount.
Stage 1B is to drill and flow test an additional 6 appraisal wells (~4km to ~30 km from other wells) within Strata-X’s high-grade area with the target to prove material 2C/3C resources to justify the first Stage 2 production pilot. Stage 2 is the first production pilot designed to prove gas flow rates. The pilot will include an additional 4 wells located around one of the 7 appraisal wells drilled in Stage 1 with about 400 meter spacing between each well. All 5 wells in the pilot will be equipped with downhole and surface equipment plus water handling facilities to allow for a long term (3 to 6 months) controlled continuous drawdown flow test to be carried out to determine gas flow rates.
Stages 3 and 4 are two addition production pilots, each comprising 5 wells. Botsgas has the option to use one or more of the production pilot wells as appraisal wells if required to add reserves.
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