Letter of Intent Executed with Gruner to CO Develop Gas Production Field

Source: www.gulfoilandgas.com 2/16/2023, Location: Africa

• Gruner Energy has executed a Letter of Intent with Kinetiko to conclude a gas development and supply agreement
• Gruner Energy is a South African, owner and operator of energy assets in Africa
• Kinetiko and Gruner Energy intend to co-fund the development of a proof of concept gas production trial, that if successful can be scaled
• The Letter of Intent provides for Gruner Energy to purchase natural gas produced for the gas development and supply agreement
• The identification of potential off takers for gas produced is significant to the potential growth of Kinetiko’s gas reserves

Kinetiko Energy Ltd (Kinetiko or the Company), an Australian gas explorer and developer focused on advanced shallow conventional gas and coal bed methane in South Africa, is pleased to provide the following update on its onshore gas exploration and production development activities.

The non-binding Letter of Intent (LOI) entered into with Grüner Energy Proprietary Limited (Gruner Energy) is considered material by the Board as it demonstrates the nature of commercial relationships that the Company is negotiating, which is integral to the Company’s business model of establishing interest in local JV partners to co-develop and co-fund gas fields in Africa. These relationships have the potential of accelerating the exploration vision with funding support.

In addition, Gruner has the capacity to be an off taker for gas produced and strengthens the market opportunities for the Company’s significant contingent gas resource. Finally, the independent certification of gas reserves and the ability of KKO to increase its gas reserves will depend on the ability of the Company to establish that there is a credible market for gas produced in what is projected to be a number of producing gas fields.

Kinetiko CEO, Nick de Blocq, commented:
“The co-signing of a Letter of Intent with an international partner in the mid- and down-stream energy sector, especially one with substantial experience on the continent of Africa, is a step change in our approach to eventual commercial production. We are targeting the southernmost areas of our Block ER271 for this project due to deeper terminal depths of those wells and the expected concurrent increase in pressures and flow rates. This LOI is but the first in our plans to develop multiple Joint Ventures with expertise in mid-stream infrastructure groups, who bring a market along with them that is eagerly awaiting our product. We are especially attracted to Grüner’s heightened sense of social responsibility and upliftment of local communities where they work, so we are well aligned with their approach to ESG.“

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