Kinetiko Energy grows gas resources by 227pc, shares jump
Shares in Kinetiko Energy (ASX:KKO) climbed almost 13 per cent to 8.8c this morning after it more than tripled its contingent gas resource (2C) — a timely development given the ongoing energy crisis in South Africa.
Independent oil and gas appraisers and certifiers Gustavson Associates upgraded the company’s 2C resource by 227 per cent to 4.9 trillion cubic feet of gas.
This follows the inclusion of information from exploration activities undertaken in the last few years and three recently granted exploration rights.
Gustavson’s resource upgrade is a core element of the company’s strategy to continue exploring and assessing the most gas-rich areas within its 4,604sqm landholding.
Kinetiko said its next move would be to assess the technical information from the 11,563 line-kilometre aeromagnetic survey that was completed this month and may lead to a further resource upgrade.
“The company now has independent confirmation of the huge scale of the Afro Energy exploration rights with further rights still to be assessed,” chairman Adam Sierakowski said.
He said the significant gas resource within an area with existing infrastructure and abundant markets set the company on the road to pursuing maiden gas reserves by progressing negotiations with South African Institutions to develop a pilot production field.
South Africa has been in the throes of an energy supply crisis since 2007 with widespread rolling blackouts a constant in the country.
State power generator Eskom implemented a further round of load shedding in December 2019 after stating that it was unable to provide about 13,000 megawatts (MW) of its total nominal capacity of about 44,000MW.
Gas has been identified as key to meeting energy demand and advancing the country’s transition to cleaner energy solutions, according to LNG Industry.
Its growing gas resource and the strong demand for gas in South Africa have undoubtedly driven Kinetiko’s shares to perform remarkably well this year despite the ongoing challenges faced by the oil and gas industry.
Since emerging from a suspension, that has been in place since October 2017, in mid-May this year, the company’s share price has risen steadily from a close of 3.9c in May, barring a blip at the end of June.
Meanwhile, Elixir Energy (ASX:EXR) has intersected 91m of net coal, including 51m in the main seam, at its Nomgon-2 coal seam gas well in Mongolia.
The company is currently measuring the gas content of the cores taken from the well at an on site laboratory, with preliminary results being consistent with those from the Nomgon-1 discovery well.
Elixir plans to drill further step-out appraisal wells before moving on to test a new sub-basin that has the potential to host coal seam gas.