Tlou Energy Limited, the ASX, AIM and BSE listed company focused on developing gas-to-power projects in southern Africa using coal bed methane ("CBM") natural gas from its gas field in Botswana, provides an update on field operations at its Lesedi CBM project. 

Key Points:

• Pilot production well locations have been agreed, scouted and inspected;
• Site preparation work has commenced for the first pilot production well;
• The Company is currently waiting on the final pieces of equipment to arrive onsite prior to spudding the first well in October.

Tlou Energy Limited is set to commence drilling of pilot production wells at its gas field in Botswana.  If successful, these wells will form part of the Company's initial gas-to-power project which will include installation of transmission lines and grid connection.  Further details on the proposed initial project are outlined below. 

Preparations are currently underway with pre-mobilisation activities to ensure adequate site clearing and construction of well-site facilities, as well as ensuring a nearby core-hole that has been drilled is adequately plugged and abandoned prior to spudding of the first well.  To maximise efficiencies, the vertical production wells and top-hole sections of lateral wells will initially be drilled, once the last of the long lead items for this stage of the program are onsite which is scheduled for early October.  Up to three production pods (comprising three wells per pod) are currently planned.

The pilot well drilling program is being conducted in accordance with health and safety requirements and are consistent with the Company's approved environmental impact statement.  There are various stages to the program including:

• Selection of well locations, site clearing and preparation;
• Mobilisation of equipment and ordering of long lead items;
• Engagement of relevant contractors (drilling supervisors, directional drilling staff, engineers);
• Field camp preparation;
• Drilling of top-hole (vertical) section of wells;
• Lateral well directional drilling and intersection with production well;
• Completion of wells including installation of well-head equipment;
• Pressure testing, dewatering; and
• Gas production, analysis and testing.

The wells will be drilled as 'dual lateral pods', comprising of a single vertical production well, intersected by two lateral wells.  The lateral wells will be drilled through the gassy coal seam with gas extracted from this coal produced through the vertical production well where it can be gathered and used for power generation. 

Initial gas-to-power project
Tlou is planning a gas-to-power project whereby gas from the Company's Lesedi CBM project will be used for power generation, and this power sold into the power market within Botswana and/or across the Southern African Power Pool (SAPP).

An initial development of up to 10 MW is planned. This will start with the first 2 MW of power which can then be expanded thereafter as further drilling is conducted and additional gas becomes available. With significant gas reserves already in place, the Company can readily expand upon successful implementation of the initial project.

The dual lateral pods will be located in the area where the initial gas-to power project will be situated, subject to success.

The Lesedi CBM project will require connection to the local power grid. This connection is planned to be made at the town of Serowe, which is located approximately 100 Km from the Lesedi CBM project. A draft transmission line route has been determined with negotiations ongoing with the regional and local land boards and the environmental impact assessment approval process continuing.

The Company plans to sell power to potential customers, either on the "spot market" or through Power Purchase Agreements (PPA) with one or more customers.  Sale of power is planned to be through the Botswana power grid which facilitates the sale of power within Botswana and regionally via the SAPP. Other options available to the Company to sell gas include potential Compressed Natural Gas (CNG) or small scale Liquified Natural Gas (LNG) projects that have been proposed to the Company by third parties including the use of natural gas as feedstock for manufacturing.