Ron Prefontaine-backed Strata‐X Energy (ASX: SXA) has more than doubled prospective resources for its Serowe coal seam gas fairway in Botswana’s Kalahari Basin to 3.3 trillion cubic feet.
The Toronto and Australian-listed company said the 1.9 tcf (2405 petajoules) or 240% increase to 3408 petajoules reflected both additional permits it had acquired earlier in the year and taking a 100% working interest in its original permits.
Colorado-based independent qualified reserves auditor MHA Petroleum Consultants completed Strata‐X’s certified mean recoverable prospective resource statement, estimating a low of 1.672 tcf, a best estimate of 3.343 tcf and a high of 5.016 tcf.
The US-based company, which also has officers in Vancouver and Brisbane and directors in Perth now holds 680,000 acres. The acreage is now fully owned by the listed company.
Chairman and significant investor Mr Prefontaine said the $3.952 million company planned to seek additional funding for its appraisal and development efforts in the coming months.
“With Strata‐X having 100% equity in its expanded Botswana CSG portfolio, we now control over 3.3 tcf of prospective resources surrounded by a large potential growth gas markets,” he said.
“This fulfils our strategy to put the company in a strong position to seek alternative sources of funding to appraise and develop these resources. This will be carried out in conjunction with the environmental approvals process over the coming months.”
The company’s $3.952 million market capitalisation of earlier today was a $1.552 million increase on September 1 last year when it also had $1.1 million in cash.
Mr Prefontaine, who held about 14% of the company at that time, has previously sold two companies — Arrow Energy and Bow Energy — to companies controlled by oil and gas giant Royal Dutch Shell and China National Petroleum Corporation.
Arrow was taken over by Shell and CNPC’s listed asset PetroChina for $3.5 billion in 2010, while Bow was pinned for $550 million the next year by the partner’s new Queensland venture Arrow.
Botswana, where the company’s resource is located, relies heavily on its mining industry for economic wealth.
Miners use about 34% of power used in the country which currently produces no gas domestically.
The African nation instead relies heavily on imported expensive diesel and electricity.
Botswana Power Corporation estimated in 2015 there was an 8000-megawatt power generation shortfall which presented a US$1.6 billion (A$2.08 billion) sales-a-year opportunity for the CSG market.
Strata-X hopes to target Botswana’s expanding electricity, manufacturing, and raw materials industries if can establish sufficient gas reserves from its appraisal efforts.
The North American company has signed on Botswana environmental firm EcoSurv to help with its efforts to gain environmental approvals for its proposed resource appraisal program.
“Work is ongoing, including meeting with local stakeholders in the permit area, and is on track for approvals to be received in the third quarter of 2018,” the company wrote in its Australian Securities Exchange announcement today.
Strata-X’s appraisal program has been designed to convert resources to reserves and prove it can undertake commercial completion methods.
“The company plans to apply the latest completion and production methods designed to yield commercial gas flow rates,” Strata-X said of its planned efforts to upgrade resources to reserves in Kalahari.
Last September, the company announced its prospective resource in Kalahari Basin had a reasonable entry cost, low sovereign risk, a low 3% government royalty cost and could supply a huge local and regional gas market.
The company also said its Kalahari land-and-mineral-rights leases were located near quality roads and infrastructure, and water produced from CSG could be transferred back to local people in exchange for reasonable access.
Colorado-based Strata-X also has exploration opportunities in the US states of Illinois and California.