Gas Desorption Testing Exceeds Expectations

Source: 4/15/2024, Location: Africa

• Excellent initial desorption testing results – 2.0 scc/gram at day 61:
o Ongoing gas desorption testing to continue for a further 2 months until rates plateau.
• Recertification currently underway - previous modelling targeted a desorption rate of 2.4scc/gram and 5 exploration wells (vs 11 currently drilled):
o Exceeding the 2.4scc/gram threshold has potential to further increase gas volumes within the acreage.

Botala Energy Ltd is pleased to provide an update on its technical progress at its 100% owned Serowe CBM Project. The initial results of the ongoing gas desorption testing are promising. The gas desorption testing is a three-stage programme designed to determine the amount of gas held within a gram of coal and the coals’ ability to release the gas under flowing conditions in production. The testing programme includes drilling and taking core samples of the coal seams from the Serowe 3-4 well, refer to Figure 5 below. The core samples are then placed in a water bath, the temperature of the water bath is maintained at a constant temperature to replicate underground conditions. Once in the water bath the coals undergo the following 3 stages of testing:

• Stage 1 – Lost gas (Called Q1): Gas pressures are measured every minute within the first 15 minutes, this initial data is used to predict the amount of gas which may have been lost in the process of drilling and handling.
• Stage 2 - Desorpable gas (called Q2): A slow desorption process measuring gas pressures daily over a 4- month period.
• Stage 3 - Crushed gas (called Q3): Core samples sent to a lab are crushed, the amount of gas produced is measured, this generally adds 10-20% more gas volume to the total gas content.
• The total gas content (QT) is calculated as the sum of Q1, Q2, and Q3.

Since starting the desorption testing the combined Q1 and Q2 gas values are approximately 2.0 scc/g over 61 days.

Botala considers this target threshold may be exceeded based on the results to date. Exceeding this threshold would provide an increase in the potential gas volumes within the acreage. Figure 1 does not include the Q3 testing results which are ongoing.

Highlights of the work completed to date:
The following highlights provide background information previously disclosed. It outlines the work completed and the future work programme:
• Remapped Botala’s leases using all Botala and open file data, delivering new coal seam thickness maps.
• Drilling of initial 5 exploration wells with selected use of NMR logs to establish gas content.
• Certification by independent certifier Sproule of a 317BCF 2C gas resource (2022).
• Since initial certification Botala has drilled 6 additional wells (2 exploration and 4 production) as Project Pitse, all wells were logged with 1 well, Serowe 3-4, being cored.
• 5 additional AMT geophysical surveys (vertical resolution) and 2 magnetic surveys (horizontal resolution) were taken for optimising well locations.
• All new data is now with the resource/reserve certifier for recertification of the gas resource, expected in May 2024.

General Geology:
The Serowe Coal Bed Methane (CBM) Project is located in the Central Kalahari Karoo Basin of Botswana.

The basin is the location of the Permian/Carboniferous aged Ecca group. This group contains 3 coal seam formations the Serowe, Upper Morupule and Lower Morupule.

Serowe Coal Seam:
Botala is targeting the upper coal seam known as Serowe coal seam. This has been the main focus for exploration and development. To date it has exhibited a higher gas content than the other seams and demonstrated that it is highly gas saturated coal with liberated gas bubbles being observed at surface during drilling. The Upper and Lower Morupule seams have also shown significant gas content. However, the gas saturations are not as high as the Serowe seam.

Figure 3 shows the area of interest that Botala has mapped over the region for the Serowe coal seam. The map contours are estimates of the Serowe coal seam thickness in metres. The mapping indicates Botala has a significant portion of the thickest seams within its acreage. The seam thins to the south where the Morupule seam also thins making this area less desirable at this current stage of exploration.

Resource Certification:
In 2022 Sproule as an independent certifier, completed a Resource Certification based on 5 exploration wells, which had been completed prior to Botala listing on the ASX. Sproule is currently recertifying the resource based on the following work completed:

• Additional 6 wells drilled and logged with the Serowe 3-4 well cored.
• Flow-testing the Serowe 3-1 well and flaring of the gas.
• Desorption testing.
• Regional gravity surveys and AMT mapping.

The methodology applied by Sproule in calculating the 2C resource is as follows:
• Establishing the coal volumes from Botala’s mapping.
• Coal volumes were multiplied by the coal density from logs to establish coal tonnage.
• Coal tonnage was multiplied by gas concentration to determine gas volumes, then a recovery factor applied.
• The gas concentration is determined from 3rd party offset wells and NMR logs. These parameters were then used in the determination of 2C resources within a 2.5km radius of the Serowe 1, Serowe 3 and Serowe 4 wells.

In the most recently drilled well, Serowe 3-4, continuous cores were taken from 299.7m to 442.32m from within the Thabala mudstones and shales and through the full sequence of the Ecca Group coals, shales and siltstones to the bottom of the hole (or total depth).

These are the first cores taken within Botala’s tenement holdings. Within the Serowe seam the coals were bright, contained vitrinite and the development of calcareous cleats was extensive both along bedding planes and along shrinkage cracks. Dissolved cleats become a significant conduit for the movement of gas within the coals.

The following analyses are currently being conducted:
• Gas desorption.
• Gas composition using GCMS to establish gas content and gas concentration.
• Mineralogy and petrography to determine porosity, permeability, vitrinite reflectance, mineralogy, ash and moisture content.

This data will form a new integrated mapping exercise which will be used as input to the updated resource certification planned for later in 2024 post the Project Pitse commercial flow-testing.

Whilst the immediate focus of drilling is concentrated on the 3 coal seams, the intervening shales and siltstones are also expected to contribute gas content. This will be the subject of a later review.

The results of this work will be used in optimising the design of the stimulation and injection testing in the 2 most suitable wells (Serowe 3-4B and Serowe 3-5B), based on data from the 4 recent production wells. This will provide certified gas production rates from each of the 3 coal seams.

Planned work:
Gas exploration and early production remain Botala’s main activities. Obtaining commercial gas flows is the key focus of Botala’s ongoing exploration and advanced gas flow studies at its Project Pitse pilot wells and proposed for its Serowe 7 well (26km Northwest of Project Pitse): The planned work is as follows:

• New integrated mapping commenced including full integration of wells, geophysical data and structural review.
• Planning for production: stimulation and injectivity testing of the S3-4B and S3-5B wells.
• Slim holes for delineation of the coal basin, resource certification and licence obligations to keep licences in good standing.
• Flow testing of the Serowe 7 well.
• Planning for the drilling of a second commercial production hub around Serowe 7, well by flow testing the Serowe 7 well and then drilling 3 to 4 production wells.

Botala CEO Kris Martinick commented “We are very pleased with the initial gas desorption testing. Based on the initial results there is strong potential that we may exceed our target rate of 2.4 scc/g which was used previously in the certification process. These results are in line with gas desorption rates that you would expect in Queensland and gives us strong confidence in our CBM Project as we rapidly advance towards development.”

This ASX announcement was approved and authorised for release by the CEO.

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