Oz Strata-X Farms Out Botswana CBM Project
Sydney-listed Strata-X Energy has signed a heads of agreement with fellow Australian explorer BotsGas to farm-out stake in its Serowe coalbed methane project in Botswana, the company said in a statement March 5.
Strata-X said the initial agreement is designed to de-risk the project and, if successful, prove sufficient reserves to secure a foundation gas sales agreement. “The executed heads of agreement allows for the drilling of one firm vertical well with staged options for an additional 18 vertical wells, which includes six additional appraisal wells and up to three production pilots designed to prove commercial gas flows and add material reserves,” the company said.
If the farm-out proceeds, BotsGas will have the option at the end of each stage to elect to proceed to the next stage or to end the farm-out arrangement. Once BotsGas elects to proceed with a stage then the partners must complete the stage within a 12-month period. Each stage must be fully funded by BotsGas up to a capped cost which has been agreed between the parties on the basis of the estimated budget for each stage, the company said. Strata-X will only need to provide funding if there are cost overruns, which contribution will be made on the basis of 51% from Strata-X and 49% from BotsGas.
Strata-X said it will retain operational control of the project for the foreseeable future and expects to start field operations early in the second quarter of 2020.
The main focus of the farm-out will be the high-grade area of the Botswana CBM fairway, which is interpreted to contain 2.38 trillion ft3 prospective gas resource net to Strata-X. In January this year, Botswana’s department of environmental affairs approved the environmental impact assessment on the Serowe CBM project.