HIGHLIGHTS
• Health, Safety and Environment
• No accidents, injuries, health or environmental incidents have been reported during the period.
• Safety meetings are conducted before each shift at the well site, and by the end of this quarter,
the Company recorded over 8,281 person-hours since the resumption of drilling without any
reportable safety incidents.
• 2024 Core Hole Exploration Program Completed with Results from Core Hole ER270-11C Logged
• Core hole ER270-11C was completed in late July, intersecting multiple pay zones and deeper
geology, resulting in significant gas shows.
• Gas-bearing geological sequences totaling 90 meters were encountered, with log analysis now
finalised.
• The 5 km proximity of ER270-11C to ER 383 strengthens confidence that the gas basin extends
across Kinetiko's entire tenement package, suggesting a substantial increase in the future
measured resource calculation.
• ER270-11C is the 38th core hole drilled, maintaining a 100% success rate in intersecting
significant gas pay zones.
• This drilling and logging of ER270-11C marks the completion of the 2022–2024 core hole
exploration program in ER 270, fulfilling all regulatory work requirements.
• Cash
• As of 30 September 2024, Kinetiko is in a strong financial position with no debt and
approximately $4.29m in available funds comprising $1.02m in cash, in addition to a further
$1.8m of proportionate funding advanced to Afro Gas Development Pty Ltd to commence a
joint venture with the IDC, who, in addition, has also contributed approximately $1.47m.
• Spudding of ER 271-23PT - First Well in Five-Well Gas Production Test Program
• Site preparation commenced in August for the first of five production test wells, including
conductor casing and water monitor well drilling.
• The 9-month program consists of drilling five production test wells in succession, with each
well undergoing extended flow testing to gather crucial data for reserve certification and
future development planning.
• Targets planned for the five wells have been selected to intersect multiple gas reservoirs and optimise gas reserves certification.
• The wells are strategically positioned near key energy infrastructure, maximising the program's
commercial potential and ensuring efficient gas delivery to off-takers.
• Production test drilling rig, Prakla RB 40S, mobilised to the site in September.
• Well-pad preparation, conductor casing and water monitor well drilling completed on-site.
• Drilling at well ER271-23PT, in the five-well production test program, began in late September
and was completed on 16 October 2024 at a depth of 463 meters.
• Well ER271-23PT did not yield commercial gas quantities during a choke test at terminal depth,
and no flow testing followed.
• Initial geological assessments indicate that the well encountered an unusually small, wellsealed compartment, identified as a geological anomaly.
• Despite the unexpected outcome at well ER271-23PT, Kinetiko remains confident as it
progresses with the next four wells, which are strategically located in geologically promising
areas backed by historical data and significant gas resource potential.
• The drill rig has been mobilised to a second production test well site, 40 km southwest of
ER271-23PT, adjacent to the Lily pipeline.
• 6 TCF of 2C contingent resources have already been confirmed, with the potential for
significant growth through this testing program.
Kinetiko Energy Ltd (Kinetiko or the Company) is developing an energy transition solution for
South Africa focused on commercialising advanced shallow conventional gas projects in the Mpumalanga
Province. It is pleased to provide the following update on its onshore gas exploration and production
development activities during the July - September 2024 quarter.
2024 Core Hole Exploration Program Completed
In August, Kinetiko announced the successful completion of its 2022 to 2024 core hole program as part of
its onshore gas exploration and production development activities and the results from its ER 270-11C
drillhole located on exploration right ER270 (see ASX Announcement 8 August 2024).
Core Hole ER270-011C Results
Core hole ER270-11C, with PQ/NQ collars reducing to NQ3 was spudded on 7 June 2024 and was
successfully completed to a final depth of 613.8 metres. The core hole was drilled in some of the Company’s
southern-most geology and approximately seven kilometres from the recent successful core well ER270-
12C (see Figure 1). The hole intersected mainly dolerite sill to 390 metres above gassy sandstones, coal and
carbonaceous siltstones and mudstone zones from the Karoo Formation below (see Figure 2, Table 2). The
added depth of the gassy zones is expected to increase the pressure and volume of the gas flow in future
production well testing.
Wireline logging was completed in core hole ER270-11C with exploration core results comprising dolerite
sills (green zone), carbonaceous zones and gassy sandstones. Gas effect in sandstones was identified over
a total of 90 metres (broad pink cross-over shading of density/neutron porosity). This does not include
carbonaceous zones or sandstone zones less than 1m thick which may also contribute gas in a producing
well. This data points to a significant level of moveable gas throughout various sections of the core hole
below the dolerite sills.
Core hole ER270-11C has provided critical data for further mapping the distribution, depth and thickness of
gas- bearing strata within the exploration right area and assists in further refining the Company’s geological
modelling.
Across the history of the 38 core holes completed, the Company has drilled a total of 18,212 metres and
intersected a total of 3,867 metres of gas pay zones greater than 1-metre thick. The continued exploration
success from core hole ER270-11C amplifies the Company’s assumption that extensive gas-laden fairways
exist across all of the Company’s exploration rights. This phase of exploration in ER270 with the drilling of
core hole ER270-11C achieves the successful conclusion of the regulator required work program in Block
ER270.
ER271-23PT – Spudding of First Well in Five-Well Gas Production Test Program
Production Well Program
Following the recentsuccessful capitalraising (see ASX Announcement 18 June 2024), a five well production
test program commenced in August (see ASX Announcement 1 August 2024). The program involves drilling
five separate production wells, which will be individually flow-tested for up to 90 days. The drilling of each
well is expected to take four to five weeks to be completed.
Once drilling is completed, each well will undergo a dewatering process anticipated to take a few days. Once
this process is complete, flow testing will then begin for each individual well, with results expected to
confirm the potential of a future gas field development immediately adjacent to the production test well.
In mid-September, Kinetiko mobilised Prakla RB 40S rig to well ER271-23PT, the first of five production test
wells (see ASX Announcement 16 September 2024). Well-pad preparation, conductor casing and water
monitor well drilling was completed on-site.
Each of the five production test wells to be drilled in sequence hhave been located based on previous
exploration success. The Company completed a core well adjacent to ER271-23PT that logging results
established the intersection of 131.5m of gassy sandstone pay zones (see ASX Announcement 30 November
2022).
Each well is also situated next to existing power infrastructure (power station, pipeline, transmission lines,
potential offtake customers) (Figure 3. Mujuba Power station is approximately 9kms from the first
production test well),so each well hasthe potentialto be the first well of a future production cluster gas field
development.
In addition, each production test well is strategically located to interpret multiple gas reservoirs and
optimise gas reserves certification potential.
To reduce technical risks in future development planning and gather data on the lifespan and size of
potential well clusters, the production test well program will focus on extended flow rates and depletion
curves for each well. These results will help estimate the production life of each well and determine how
many wells are needed per cluster. It will also project how long clusters can produce gas before additional
wells are required to maintain gas delivery to customers.
This information will be used to model the economics of each production cluster and feasibility studies.
Sproule B.V.'s initial Reserve calculation assumed 50,000 SCF/day of gas from each well (see ASX
Announcement 21 August 2023). Achieving extended flow rates from this appraisal program above this
level should significantly improve the development economics and Reserve estimates.
Kinetiko announced the commencement of drilling at well ER271-23PT on Friday, 27 September (see ASX
Announcement 30 September 2024). Post end of quarter, the Company announced the completion of
drilling at well ER271-23PT ahead of schedule on 16 October 2024 (see ASX Announcement 23 October
2024).
Observations from Well ER271-23PT
Well ER271-23PT was located 5km East of the Majuba power station. It was positioned adjacent to a core
well where logging results established the intersection of 131.5mof gassy sandstone pay zones and the coals
had some of the highest gas content of nearly 13 m3/tonne (see ASX Announcement 30 November 2022).
However, despite logging results correlating with the core well, the production test well lacked sufficient
compartment size to hold commercial volumes of gas. A choke test at terminal depth did not produce
commercial gas quantities. Following the introduction of water into the well and additional testing, it was
determined that the well intersected a very small, well-sealed compartment.
The shallow nature of the target geology has delivered greater water and gas saturations in each of the
previous 13 test wells drilled by the Company over the past decade. As such, this result is assessed as an
anomaly. Exploration has confirmed the consistent, widespread existence of gas-bearing poroussandstones
throughout Kinetiko’s exploration rights, and the Company remains robustly confident in its targeted
remaining four production test wells intersecting commercial gas.
Kinetiko’s exploration advantage lies in the low cost of drilling shallow conventional wells, allowing the
company to use test drilling as an efficient method for discovering commercial onshore gas. The ER271-
23PT drilling was completed without incident and below budget, costing less than AUD$500,000. This has
enabled the Company to build a multi-well exploration program at a fraction of the cost compared to
traditional onshore gas exploration and development. This supports the Company’s strategy to conduct
expansive drilling programs in strategic locations to maximise the potential of commercial fields being
developed.
The Company will continue to monitor well ER271-23PT to gather further data, providing valuable
information that will inform future drilling effortsto optimise production from the wells and potentially reworking well ER271-23PT.
Next Steps and Broader Production Test Well Program
The remaining four production test wells are strategically located near key infrastructure, including gas
pipelines and transmission lines, positioning Kinetiko as a potential supplierto South Africa’s energy market.
The program will flow-test each well for an extended period to gather critical data on flow rates, reservoir
pressure, and depletion curves. This data will inform the economic modelling for future gas field
developments.
Based on prior reserves, Kinetiko anticipates exceeding flow rate targets of 50,000 SCF/day for each
additional well, and with drilling progressing rapidly, the company remains poised to unlock significant
onshore gas resources in South Africa.
Information Required by Listing Rule 5.4.1
The Company had cash outflows for exploration and evaluation incurred during the first quarter of the 2025
financial year in the amount of approximately ZAR 18.57m (A$1.54m) to cover, inter alia:
• Drilling services
• Proof-of-Concept GTP project equipment and services
• Contractor fees
• Consultants
• Owner’s Engineer and other Professional services
• Waste Management solutions
• Plant hire
• Environmental auditing and application support
• Salaries, wages and day-rates
• Legal advice
• Office / G&A
During the September 2024 quarter, approximately $275k was paid to directors and their associates for
directors', company secretarial, corporate, capital raising, and legal fees.
Commitment to Domestic Employment
Direct and Indirect Employment from Kinetiko Energy Activities:
The company employs local community members, labourers, plant, equipment and consumables at every
possible opportunity, following our policy of localising our spending wherever we can find quality goods and
services at competitive rates.
Competent Persons and Compliance Statements
Unless otherwise specified, information in this report relating to operations, exploration, and related
technical comments has been compiled by CEO Mr. Nick de Blocq, who has over 36 years of experience in
energy minerals exploration and production. He is assisted by registered Petroleum Geologist, Mr Paul
Tromp, who has over 40 years of onshore oil and gas field experience. Mr de Blocq consents to the inclusion
of this information in the form and context in which it appears.
The Company confirms that it is not aware of any new information or data that materially affect the
information included in the relevant market announcements and that all material assumptions and technical
parameters underpinning the estimates in the relevant market announcement continue to apply and have
not materially changed.