Kinetiko Energy reports sustained and improving gas flows from its South African test wells, prompting a drilling optimization study to enhance recovery and support future production.
- Second production test well 271-KV06PT reached 631m depth with confirmed gas flaring
- Both wells show steadily improving gas flow, challenging earlier geological anomaly assumptions
- Drilling optimization study underway to address potential gas flow inhibition from drilling techniques
- Kinetiko maintains 100% success rate in encountering gas across all wells drilled
- Plans to resume production well testing after optimization study completion in coming weeks
Sustained Gas Presence Validated
Kinetiko Energy Ltd (ASX: KKO) has delivered encouraging results from its ongoing gas production testing program in South Africa's Mpumalanga Province. The company's second production test well, 271-KV06PT, successfully reached its terminal depth of 631 meters and demonstrated sustained gas presence, confirmed by active gas flaring during testing. This milestone reinforces Kinetiko's confidence in the gas-bearing potential of its exploration rights.
Meanwhile, the first production test well, 271-23PT, initially thought to be affected by a geological anomaly limiting gas flow, has shown increasing gas presence upon retesting. This development disproves earlier conclusions of a limited reservoir compartment and underscores the ubiquity of gas across the company's drilling history.
Drilling Technique Under Scrutiny
Despite intersecting gassy formations, initial gas production was lower than expected, prompting Kinetiko to investigate the impact of drilling methods on gas flow. The company hypothesizes that the drilling process may have created a temporary 'skin' or gas block within the well bore, inhibiting early gas movement. Observations of gradually increasing gas flow as these blockages dissipate support this theory.
To address this, Kinetiko has initiated a comprehensive drilling optimization study. This study will evaluate drilling parameters such as water volume, pressure, chemical use, and continuous water removal protocols. Laboratory testing of core samples is underway in Perth to assess potential water blockages and formation damage, with the goal of refining drilling techniques to maximize gas recovery.
Strategic Implications and Next Steps
The drilling optimization study represents a critical step before scaling up production drilling. Kinetiko plans to apply lessons learned to future wells, enhancing flow rates and operational efficiency. Drilling is expected to recommence in April 2025, with completion strategies informed by laboratory results.
Beyond technical improvements, these findings bolster Kinetiko's resource base. The company currently holds 6 trillion cubic feet (2C) of contingent gas resources, with expectations for significant growth as the five-well testing program progresses. Success in converting prospective resources into contingent reserves will be pivotal for advancing commercial development.
Looking ahead, Kinetiko will focus on the Amersfoort region within its ER271 tenement, collaborating with the South African Industrial Development Corporation to develop a producing gas field. This aligns with South Africa's energy transition goals, where Kinetiko's gas projects could provide reliable base load power and support renewable integration.
Executive Commentary
Executive Chairman Adam Sierakowski highlighted the positive trajectory: "We start 2025 with very positive news of gas flaring from the second production test well and stronger gas observations from the first. The data confirms that gas is present in every well drilled, supporting our thesis of widespread gas-bearing geology across our exploration rights."
He further emphasized the importance of the drilling optimization study in unlocking the full potential of these resources and improving future well performance.
Bottom Line?
Kinetiko’s drilling optimization study could unlock stronger gas flows, setting the stage for accelerated development in South Africa’s emerging gas sector.
Questions in the middle?
- Will the drilling optimization study confirm the hypothesized skin effect and lead to materially higher gas flow rates?
- How will updated resource estimates from ongoing testing impact Kinetiko’s valuation and project financing options?
- What timeline and scale can investors expect for commercial production following the planned drilling recommencement?