Tlou Energy’s (LSE:TLOU) share price dipped 5pc to 8p on Tuesday after the firm revealed positive news about its Coal Bed Methane fuelled plant in Botswana. The company confirms it has been chosen by the government of Botswana as a preferred bidder for the development of the plant which will output up to 100MW of power.
The submitted proposal included a staged development plan commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana. If the initial project is successful, the firm will look to expand further.
Meanwhile, on the ground, Tlou has been busy drilling an advanced-stage project called Lesedi where it has been drilling well formations it refers to as ‘dual lateral pods’. The pods consist of a single vertical production well that is intersected by two lateral or horizontal wells. The two wells then drill through a gassy coal seam, where gas is extracted, gathered, and used for production.
Preparations have been made across three ‘pods’, with further drilling of the third one, Lesedi-5, being dependent on the results of the first two formations. Following successful drilling and the subsequent installation of surface production facilities, the completed wells will then begin production testing. This will aim to de-water and lower pressure in the coal seam to achieve potential gas flow.
Tlou says this is ‘an enormous step forward for the company in the development of the Gas-to-Power project’ and estimates the initial 10MW project could generate gross revenue of approximately $10m per annum.
Tlou’s Managing Director, Mr Tony Gilby commented, “The approval of the Company’s tender represents great progress for Tlou. The proposal that we submitted was very competitive and we welcome this decision by the Government. We look forward to working together to deliver a successful power project. The effort put in by our team over recent years has been phenomenal and this result makes it all worthwhile. The Company will now progress with additional work on the ground to deliver a Gas-to-Power solution that can bring significant benefits to the country and to our shareholders. I look forward to updating the market as we continue to develop the project.”
In today’s announcement, the company said it had a cash balance of around AUD $6.5m at the end of March 2019 and is completely debt free. Furthermore, Tlou highlights it is well funded through to the second half of 2020 with sufficient funds to carry out its planned drilling and seismic activities.