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Strata-X announces Serowe CSG Project drilling

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World Coal,

The directors and management of Strata-X Energy Ltd. have announced that the company has entered into a turnkey contract for 1 firm plus one optional vertical well with Danos Drilling of Gabarone, Botswana for the initial appraisal drilling of the company’s 100% owned Serowe CSG Project.

The company has received all the necessary government approvals for the appraisal programme and is set to begin drilling operations during the first week of February.

Following the company’s internal interpretation of historical coal and CSG drilling in Botswana last year, Strata-X focused on the upper stratigraphic section within a high graded area. The stratigraphic section has bright and gas saturated coals that are interpreted to be highly prospective for commercial CSG. The company holds 100% equity in approximately 320 000 acres within the interpreted high-grade area of the Serowe CSG Project.

SXE 19B-1 will be the first vertical well to drill and flow test within the high graded area and is located adjacent to (~ 2.5 km) a fully cored well. The cored well was drilled in 2003 by the Government of Botswana and intersected about 8 metres of bright coals with gas saturations up to 100%. The SXE 19B-1 well will be drilled to approximately 490 metres and is located in Strata-X’s 100% owned Prospecting License (PL) 19-B.

The operations plan is to case and suspend the SXE 19B-1 well for long term production testing. If the results of SXE 19B-1 are sufficiently positive, the company may consider expanding the drilling programme to a pilot programme and include the optional second well in that pilot.

As previously announced, the company has selected Adam Scott to direct the CSG wellsite evaluation for the drilling programme. Scott has a long career in CSG exploration and appraisal with Arrow Energy, Sino Gas and Energy, Origin Energy and others and is a highly regarded expert in CSG evaluation. Scott will be on location directing the evaluation of the coals, gas measurements and flow tests.

Ron Prefontaine, Strata-X Chairman stated: “Our small team at Strata-X is looking forward to the results of the first wells within the interpreted high graded area of the Botswana CSG Fairway. Botswana has low sovereign risk and a supportive government that recognises the value of commercialising domestic gas, to feed the growth of this emerging economy.”

“In addition to the immediate and longer term gas markets in Botswana, there are large and diverse energy hungry markets in the surrounding Southern Africa countries. The potential size of the Southern African gas market far exceeds the internal estimates of the gas markets servicing the Walloon CSG Fairway in Queensland, when I started as an executive director at Arrow Energy in 2001. Starting from zero reserves in 2001, fast-forwarding to 2018, the Walloon CSG Fairway now has 30 TCF of remaining reserves.”

“There are many similarities between the Surat Basin Walloon CSG Fairway and the Botswana CSG Fairway. The main technical difference is that the majority of the Walloon CSG Fairway are bright coals and typically have high gas saturations that have proven to be highly prospective for CSG. Whereas over the majority of Botswana CSG Fairway, the traditionally targeted coals are dull and under-saturated. These dull and under-saturated coals require a lot more regional water drawdowns before sustained gas flows are achieved and therefore more expensive to produce than bright, highly gas saturated coal seams – but these characteristics are not true of the interpreted highgrade area coals.”

“Last year, Strata-X identified an area over the Botswana CSG Fairway with multiple bright and highly gas saturated coal seams similar to the Walloon CSG Fairway coals over an ~80 metre stratigraphic interval that are interpreted as highly prospective for CSG. We have referred to this area as the highgraded area.”

“Since the highgrade identification, Strata-X has acquired all available vacant and dormant acreage and now has 320 000 acres of land holdings within the interpreted high grade area. Our certifier has estimated an average of ~1.3 Bcf of gas resource potential per square kilometer within the high graded area.”

“Strata-X’s 19B-1 test will be the first vertical production well to drill and flow test the bright, gassy coals within the highgraded area of the Botswana CSG Fairway.”

“An example of positive results from our first well would be encountering multiple bright coal seams coupled with modest water flows and some free gas. This result could demonstrate to our technical team that the highgraded area has the potential to be highly prospective for commercial CSG.”

“If positive results are encountered in the first well, with the goal to accelerate timelines to achieve reserve certification required for a foundation gas sales agreement, Strata-X may elect to go straight to a CSG pilot programme with the target outcome to prove commercial gas flows. Commercial gas flows are not only a requisite for reserve certification, but are in my experience, a major catalyst for gas sales agreements and successful CSG field development.”

The company holds 4784 KM2 (1 173 000 acres) over the Serowe CSG Project with a certified Prospective Resource of 3.3 TCF. ASX disclosure note - 5.28.2 - The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

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