- Tlou Energy is an aspiring gas production and electricity generation company
- Enormous gas asset in Botswana with 9,300 sq km of acreage and proven gas (CBM) reserves
- The first phase of multiple production wells completed at Lesedi are currently being production tested.
- The production wells Lesedi 3P and 4P are currently flowing gas with flow rates expected to increase over time with first electricity sales targeted for Q4 2020.
- Tlou’s projects are 100% owned and operated in an area that has a huge regional power demand.
What it owns
An Environmental Approvals and a Mining Licence are already in place as well as four further CBM prospecting licences covering an area of approximately 3,800 Km2.
The company’s most recently acquired acreage is the 1,000 Km2 Boomslang licence close to Lesedi, while it also owns the 4,500 Km2 Mamba field to take its total acreage to 9,300 Km2.
What the boss says
"I am very encouraged by the recently completed drilling program and in particular the strong gas indications observed to date,” said Tony Gilby, Tlou managing director.
“Furthermore, the good initial water flow, which is higher than that previously observed at Selemo, is potentially indicative of good permeability and therefore potentially good gas flows in this geologically high-graded area.
How it's doing
In January, Tlou said rates of production from Lesedi were variable with gas flow rates fluctuating up and down.
Gas and water are being produced at the Lesedi 3 and 4 production pods, but having started at 20 Mscf (thousand standard cubic feet gas per day) attempts to stabilise production at a higher rate of 80-100Mscf from each pod have been hampered by the changing flow rates.
Water extraction is also slowing the process though Tlou said it still has no reason to think it won't meet the higher target.
Tlou believes continued production of water from the coal is a sign of good reservoir permeability and potentially means that the wells will, with time, produce gas from a larger area and at a higher rate than would otherwise be the case.
A request for an interim power purchase agreement has been submitted to speed up the permitting process in Botswana, while Tlou has received a non-binding proposal from the Botswana Development Corporation (BDC) to fund the first 10Mw of the project.
Watch the interview
- Increasing Gas flow results from Lesedi 3P and 4P
- Finalisation of Power Purchase Agreement with the Botswana Government
- Additional CBM reserves booked in Tlou’s projects
What the broker says: Shore Capital
Shore Capital sees the signing of a power purchase agreement (PPA) for its Lesedi project in Botswana as a catalyst for funding and a re-rating of Tlou.
Tlou hopes to finalise both the PPA and development financing as soon as possible, with first electricity sales targeted towards the end of next year.
The first phase of funding for a 10Mw pilot project might even be in place by the end of this year (2019) and Shore Capital believes a successful project financing (likely mixing equity with debt) has the potential to act as a powerful kicker to the share price.
The house also sees an opportunity for Tlou to become a key power player in-country and to develop a regionally significant CBM project.
“Lesedi would be the first such project in Botswana to move into commercial production, offering strong potential for the supply of power domestically and via the Southern African Power Pool.
South Africa, meanwhile, has an Integrated Resource Plan 2019 that targets an additional 3,000MW of gas-fired generation capacity by 2030 and supports strategic power projects in neighbouring countries.