Massive 944% Increase in 2P Gas Reserves

This is huge!!!  Announcement released on UK market just 2hrs ago.  Massive 944% Increase in TOU's 2P (proven and probable) Gas Reserves!  Good times.


20 February 2018


Tlou Energy Limited


("Tlou" or "the Company")


Tlou achieves a further material increase in Gas Reserves



Tlou Energy Limited, the ASX, AIM and BSE listed company focused on delivering power in Botswana and southern Africa through the development of coal bed methane ("CBM") is pleased to announce a very significant and material upgrade of its 2P & 3P gas Reserves.  This Reserves assessment has been independently certified by Dr Bruce McConachie of SRK Consulting (Australasia) Pty Ltd ("SRK").


Highlights:

Ø  2P (Proved and Probable) Gas Reserves increased 944% to 40.8 billion cubic feet ('BCF') (previously 3.9 BCF), and;

Ø  3P (Proved, Probable and Possible) Gas Reserves increased by 63% to 426.6 BCF (previously 261.1 BCF).


Tlou Managing Director Tony Gilby said, "This very significant upgrade in gas Reserves reinforces the commerciality of the Lesedi and Mamba Projects.  The recent seismic survey and core-hole drilling campaign, along with the Selemo pilot wells producing sustained gas flows for a substantial period of time, confirms that there is huge gas production potential for Tlou's area.  Ongoing work to assess this potential continues in tandem with planning for connection to the regional power grid.


We believe that the Lesedi and Mamba projects represent a very valuable resource for Tlou's shareholders.  This Reserves upgrade provides continued confidence for the Company to invest in additional appraisal activities aimed at further increasing certified gas Reserves.  Adding Reserves, and planning for grid connection, reinforces the Company's objective to become the first company to sell power generated by CBM gas in Botswana."


In accordance with the Society of Petroleum Engineers ("SPE") 2007 Petroleum Resource Management System ("PRMS") Guidelines, as well as the 2011 Guidelines for Application of the PRMS approved by the SPE, SRK has attributed Gas Reserves to Tlou's 100% interest in the Lesedi and Mamba Project permits using the deterministic method of petroleum Reserves estimation as at 31 December 2017.


The table below, in Billion Cubic Feet (BCF) and Petajoules (PJ), summarises the changes to the Company's Reserves position for Lesedi and Mamba as at 31 December 2017.


Table 1:  Lesedi and Mamba Independent Gas Reserves Certification (Lower Morupule seam only)

Tlou Interest (100%)

Gas Reserves (BCF) 1 & 2

Gas Reserves (PJ) 2 & 3

Category

1P

2P

3P

1P

2P

3P

01 January 2017

certification by SRK

0.17

3.9

261.1

0.14

3.2

242.7

31 December 2017

certification by SRK

0.35

40.8

426.6

0.31

35.7

373.7

Increase

0.19

36.9

165.5

0.17

32.5

131.0

Increase (%)

113%

944%

63%

126%

1007%

54%


Notes to Tables 1 above:

1) Tlou's Gas Reserves have not been adjusted for fuel or shrinkage and have been calculated at the wellhead (which is the reference point for the purposes of ASX Listing Rule 5.26.5) for the Lower Morupule seam only.

2) Gas volumes are expressed in billions of cubic feet (BCF) at standard temperature and pressure and in Petajoules (PJ).

3) The energy content of the gas at 31 December 2017 was determined by SRK as 0.876 PJ per billion cubic feet for the Lower Morupule coal seam based on core-hole gas composition in the individual areas where Reserves were certified.


SRK has consented to the information in this announcement being released.


Additional information in relation to the gas Reserve estimates for ML 2017/18L, PL001/2004 (Lesedi CBM Project) and PL's 238/2014, 239/2014, 240/2014, 241/2014 (Mamba CBM Project), which is the subject of this announcement, and required to be disclosed pursuant to Chapter 5 of the ASX Listing Rules, is set out in Appendix 1 of this announcement.


The Reserves assessment received from SRK represents an updated independent certification that is based on SRK's review of exploration activities conducted in 2017 (comprising the ~260 km 2D seismic survey and thickness data but not yet gas compositions from two new core-holes) and, consistent with the prior Reserves assessments (announced to the market on 12 October 2016 and 15 February 2017 respectively), relates only to the Lower Morupule coal seam.  It should be noted that the final gas and coal analysis of the three recently drilled core-holes have not yet been incorporated in this Reserves assessment whilst the samples continue to be analysed.  SRK considers the preliminary gas results suggest there will be no material impact (other than improved confirmation) when the final data is available.


The current Reserves assessment by SRK (which is the subject of this announcement) does not include an updated review and assessment of Contingent Resources in the Lesedi or Mamba Project areas, which will be the subject of a later review.  As such, the Contingent Resources of the Company (as assessed by SRK in 2015) and shown in Table 2 below in accordance with ASX Listing Rule 5.25.3, have been amended by SRK to deduct the volume of prior Contingent Resources converted to the Reserves category.