Kinetiko Energy's productive March quarter sets the stage for near-term first production and revenue

Kinetiko Energy Ltd (ASX:KKO) enjoyed a productive March quarter that has set the stage for first production and revenues in the near term at its Amersfoort Project in South Africa. Activities at the project are carried out through Afro Energy (Pty) Ltd, in which Kinetiko holds 49%, and during the quarter as a result of being granted a bulk gas production and removal permit, Afro Energy began preparing a short-term pilot gas production program. This is expected to see gas produced from well KA-03PTR and possibly well KA-03PT2 (adjacent) sold to domestic CNG trader(s) for transportation from the well site for distribution to industries in the Johannesburg region. As part of this planning the two wells underwent workovers to maximise gas flow rates and recovery.  Pilot production well workover  The well workover program in preparation for pilot gas-to-CNG production was successfully completed and subsequent gas testing has confirmed commercial flow rate and quality to offtake specifications.  Afro Energy intends to apply for full production rights for ER56 as soon as possible after the commencement of production of well-KA 03PTR and seek certification of maiden gas reserves. At this stage, the company is on track to begin production later this quarter or early in the third quarter. Commissioning work completed  The company completed the upgrade, testing and commissioning of surface and sub-surface equipment on Well KA - 03PTR during the period, as well as the completion of upgrades to the access road and terminal landing in preparation of a gas-to-CNG pilot project under the bulk sampling permit. Kinetiko subsequently commenced with controlled well flow clean-up periods to clean and condition the well in anticipation of controlled testing of initial gas flow rates, average stabilised gas flow rates, methane content, casing pressure, and other measures. In addition, upgrades to the access road and terminal landing was completed in anticipation of pilot gas production.  Platform set for first production With the recent successful gas flow rate testing on Well KA-03PTR, Afro Energy is strategically positioned to complete an offtake agreement and commence commercial production.  On achieving commercial production Afro Energy is primed for the booking of first revenues and to obtain certification of maiden gas reserves. Kinetiko anticipates that these significant milestones can be reached during this current quarter and in quarter three of 2021. Aeromagnetic survey area and Amersfoort Project exploration licences. Aeromagnetic survey confirms continuity The latest aeromagnetic survey completed links together the two previous surveys for a combined 965 square kilometres of gas-prone Karoo sediments and intruding dolerite bodies and interpretation has confirmed the continuity of gas prospective geology. Six new potential gas compartments have been identified in the survey area ranging in size from 5.7 square kilometres to 22.5 square kilometres and in total 77 square kilometres. The total gas compartments identified on the Amersfoort Project have now reached 37 and 257 square kilometres.  This extensive area of high-resolution aeromagnetic data will guide the sequence of exploration drilling to evaluate the gas compartments potential to host production fields.  New non-executive director In February, Tom Fontaine was appointed to the Kinetiko board as a non-executive director. Fontaine is a professional engineer with more than 25 years' technical and commercial experience in the international oil and gas industry including start-up, running and building resource companies. In the mid 2000s, he co-founded Pure Energy Limited whose primary endeavour was to secure prospective coal bed methane acreage in Queensland and develop a resource.  Pure Energy successfully drilled more than 40 wells to prove over 1 trillion cubic feet of gas, which enabled the company to be sold to British Gas for over A$1 billion in 2009.  Strong funding initiatives ongoing Kinetiko has continued to promote the potential of the Amersfoort project to be developed as a significant scalable onshore gas producer in South Africa close to multiple markets and surrounded by energy infrastructure. The achievements delivered during the March 2021 quarter and the ongoing development of the Afro Energy joint venture have elicited a number of positive responses from potential funding institutions both inside South Africa and abroad to fund and participate in the Amersfoort project development - in particular the potential development of a pilot production field.