Energy company Kinetiko Energy expects that it will formally close the acquisition of 100% of Afro Energy within the next few weeks.
Australia-headquartered Kinetiko is developing an energy transition solution for South Africa focused on commercialising advanced shallow conventional gas projects in Mpumalanga.
The company provided an update on its onshore gas exploration and production development activities on September 4.
South African investment company Talent 10 Holdings (T10), whose stakeholders comprise key South African oil and gas executives, provides ongoing domestic support for Kinetiko's vision to become a major energy transition solution provider in South Africa.
On December 24, 2021, Kinetiko announced that it had executed binding agreements to acquire the remaining 51% of Afro Energy it did not already own from Badimo Gas, with consideration for the acquisition being about 568-million shares in Kinetiko.
To complete the merger, a condition was the facilitation by Kinetiko of a $6.5-million sell-down of consideration shares. With the execution of a binding funding commitment, all conditions precedent to the merger can now be satisfied.
About 72-million of the consideration shares will be issued to T10 at a price of $0.09 a share. The $6.5-million will be released to Badimo in accordance with the terms of the merger agreement and shareholder approvals.
Kinetiko last month announced a maiden gas reserve of 3.1-billion cubic feet over its pilot gas production field in South Africa and revealed that an independent gas reserve and resource report had resulted in a 20% increase in the 2C contingent resource to three-trillion cubic feet over the company’s granted exploration rights.
It also signed a nonbinding term sheet with the Industrial Development Corporation of South Africa (IDC) to jointly develop an onshore liquefied natural gas (LNG) project.
The IDC will invest an initial R630-million for a 30% equity stake in the initial 50 MW-equivalent LNG operation. It will also provide R210-million in debt funding for the initial project.
Kinetiko expects to eventually expand the project to a 500 MW-equivalent LNG project.